Bank-reconciliation item for cash receipts already recorded in the books but not yet shown on the bank statement at the statement date.
A deposit in transit is a cash receipt that the company has already recorded and delivered to the bank, but that the bank has not yet processed onto the statement by the reconciliation date.
Deposits in transit are one of the most common reasons the book cash balance and bank statement do not agree at period end. Recognizing them correctly keeps accountants from treating a normal timing difference as an error or a missing entry.
The company usually records the cash receipt when it receives or deposits the money. If the deposit reaches the bank near the statement cutoff, the bank may not post it until the next business day. In the reconciliation, the amount is added to the bank-side balance because the books already include it.
| Situation | Book Treatment | Reconciliation Effect |
|---|---|---|
| Customer receipt deposited before period end | Cash is already recorded in the ledger | Add to bank side if not yet on the statement |
| Deposit posted by bank before statement date | Cash is already recorded in the ledger | No separate reconciling item remains |
| Deposit slip error or duplicate posting | Books may be wrong | Investigate and correct the books if needed |
The company records a 1,450 cash receipt on April 30 and deposits it that evening, but the bank statement dated April 30 does not show it yet.
| Item | Amount |
|---|---|
| Cash balance per bank statement | 32,800 |
| Add: deposit in transit | 1,450 |
| Adjusted bank balance | 34,250 |
If the book cash balance is already 34,250, the reconciling item explains the difference without any new journal entry.
A deposit in transit is not the same as an unrecorded cash receipt. In a true deposit in transit, the company books already include the amount. It is also not a permanent difference. Once the bank posts the deposit, the reconciling item disappears.