Dinho Corporation identified the following data when preparing its April bank reconciliation: $$\begin{array} { l r }
\text { Bank statement balance } & \$ 45,000 \
\text { Dinho's book balance (before adjustments) } & ? \
\text { Outstanding checks } & 4,500 \
\text { NSF checks } & 1,400 \
\text { Service charge } & 300 \
\text { Deposits in transit } & 5,000 \
\text { Interest earned on checking account } & 25
\end{array}$$
- In addition,Dinho incorrectly recorded a deposit in its books in the amount of $1,000.The correct amount was recorded by the bank as $1,200.
What is the net amount of the adjustments to Dinho's book balance as a result of the bank reconciliation?

A)$1,675 increase
B)$1,700 increase
C)$1,675 decrease
D)$1,475 decrease

Question

Dinho Corporation identified the following data when preparing its April bank reconciliation: $$\begin{array} { l r } 
\text { Bank statement balance } & \$ 45,000 \
\text { Dinho's book balance (before adjustments) } & ? \
\text { Outstanding checks } & 4,500 \
\text { NSF checks } & 1,400 \
\text { Service charge } & 300 \
\text { Deposits in transit } & 5,000 \
\text { Interest earned on checking account } & 25
\end{array}$$
- In addition,Dinho incorrectly recorded a deposit in its books in the amount of $1,000.The correct amount was recorded by the bank as $1,200.
What is the net amount of the adjustments to Dinho's book balance as a result of the bank reconciliation?

A)$1,675 increase
B)$1,700 increase
C)$1,675 decrease
D)$1,475 decrease

Quizplus · Accepted Answer

Based on the information given, we know that Dinho's book balance needs to be adjusted downward by $1,000 (to correct the deposit error), and upward by $1,200 (to account for the deposit not yet recorded in the books). This results in a net adjustment of $200 increase to the book balance.

However, the question asks for the net amount of adjustments to the book balance, not the final adjusted book balance itself. Since we know the bank balance increased by $1,675 (as per the bank statement), but the book balance only increased by $200, we can see that there must have been a net adjustment of $1,475 decrease to the book balance.

Therefore, the correct answer is D) $1,475 decrease.

Dinho Corporation Identified the Following Data When Preparing Its April