The Dinho Corporation Identified the Following Data When Preparing Their

question 44

Multiple Choice

The Dinho Corporation identified the following data when preparing their April bank reconciliation: $$\begin{array} { l r } \text { Bank statement balance } & \$ 45,000 \\\text { Dinho's book balance (before adjustments) } & ? \\\text { Outstanding checks } & 4,500 \\\text { NSF checks } & 1,400 \\\text { Service charges } & 300 \\\text { Deposits in transit } & 5,000 \\\text { Interest earned on checking account } & 25\end{array}$$ 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 adjustment to Dinho's cash balance as a result of the bank reconciliation?

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

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Definitions:

Net Cash Flow

The difference between a company's cash inflows and outflows over a specific period, indicating its ability to generate cash.

Differential Revenue

The amount of increase or decrease in revenue expected from a particular course of action as compared with an alternative.

Differential Cost

The amount of increase or decrease in cost expected from a particular course of action compared with an alternative.

Unit Cost

The total expense incurred to produce, store, and sell one unit of a product, including direct materials, direct labor, and overhead costs.