Final answer:
The net adjustment to Dinho's cash balance after the bank reconciliation process is a decrease of $1,475. This is calculated by considering outstanding checks, deposits in transit, NSF checks, service charges, interest earned, and correcting the deposit recording error.
Step-by-step explanation:
To determine the net amount of the adjustment to Dinho's cash balance as a result of the bank reconciliation, each adjustment on the bank statement and the books must be accounted for. Firstly, the outstanding checks of $4,500 will decrease the bank statement balance, while the deposits in transit of $5,000 will increase it. Next, the NSF checks of $1,400 and bank service charges of $300 will reduce Dinho's book balance. The interest earned of $25 will increase the book balance. Lastly, the error in recording the deposit (correcting a $1,000 record to $1,200) results in an additional $200 increase in the book balance.
Adjusting Dinho's book balance involves adding deposits in transit and interest earned, and subtracting NSF checks, service charges, and correcting the deposit error:
- Add interest earned: $25
- Subtract NSF checks: $1,400
- Subtract service charges: $300
- Add corrected deposit amount: $200 (since the $1,000 was an under-recording)
The net adjustment to the book balance is therefore a decrease of $1,475 ($1,400 + $300 - $25 + $200), making the correct answer (d).