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What is a deposit in transit?

Author:
Harold Averkamp, CPA, MBA

Definition of Deposit in Transit

A company’s deposit in transit is the currency and customers’ checks that have been received and are rightfully reported as cash on the date received, and the amount will not appear on the company’s bank statement until a later date. A deposit in transit is also known as an outstanding deposit.

When there is a deposit in transit, the amount should be listed on the company’s bank reconciliation as an addition to the balance per bank.

Example of Deposit in Transit

To illustrate a deposit in transit, let’s assume that a retailer had sales of $4,600 on Saturday, June 29. The retailer deposits the money in the bank’s night depository on Saturday evening. The retailer’s Cash should be debited for $4,600 on June 29. However, the bank statement will report the $4,600 as a deposit on Monday, July 1, when the bank processes the items from its night depository.

When preparing a bank reconciliation as of June 30, the company needs to adjust the balance on the bank statement by adding $4,600 for the deposit in transit. This is done because the $4,600 is rightfully included in the company’s general ledger as of June 29, but the $4,600 is not reported on the bank statement as of June 30.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

Learn More About Harold

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