Outstanding Checks and Deposits in Transit, Explained
An outstanding check is a payment you've written and recorded in your books, but the recipient hasn't yet cashed — so it doesn't appear on your bank statement. A deposit in transit is the mirror image: money you've recorded as received and deposited, but the bank hasn't yet credited to your account. Together, these two items are the most common 'reconciling items' on a bank reconciliation, and neither one needs an adjusting journal entry — they self-clear in the next period.
Outstanding checks: definition and example
You write check #2041 to a vendor on June 28 for $850 and post it in your books that day (debit Vendor Expense, credit Cash). The vendor doesn't deposit it until July 5, so on your June 30 bank statement, that $850 is still in your account.
Result: Your books show cash $850 lower than the bank does. On the June reconciliation, you list this as an outstanding check that reduces the bank balance. No journal entry is needed — the check is already in your books.
Deposits in transit: definition and example
You receive a $2,000 customer payment on June 30 and deposit it that evening. Your books show cash up by $2,000 on June 30, but the bank doesn't process it until July 1, so it's missing from the June bank statement.
Result: Your books show cash $2,000 higher than the bank does. On the June reconciliation, you list this as a deposit in transit that increases the bank balance. No journal entry is needed — the deposit is already in your books.
How they appear on a reconciliation
Bank statement balance $12,450
Add: deposits in transit $ 2,000
Less: outstanding checks $ 850
= Adjusted bank balance $13,600
Book (GL) balance $13,600
= Adjusted book balance $13,600 ✓How long should they stay open?
- Deposits in transit: 1–3 business days. If a deposit is still in transit after 5 days, call the bank — something's wrong.
- Outstanding checks: Most clear within 30 days. After 90 days, contact the recipient. After 180 days, most US states require you to escheat (turn over) uncashed checks to the state's unclaimed property office. UK / EU rules vary.
Stale-dated checks and how to clear them
If an outstanding check is over 6 months old and the recipient has gone unresponsive, the standard accounting treatment is:
- Reverse the original entry: debit Cash, credit the original expense (or 'Stale Check Income' if the period is closed).
- Issue a stop-payment order with the bank to prevent the original cheque clearing if it surfaces.
- Check your state's escheatment rules — many require unclaimed funds to be remitted to the state, not retained as income.
Frequently asked questions
Do outstanding checks need a journal entry?
No — they're already in your books. They appear on the reconciliation as a deduction from the bank balance and self-clear when the check is presented in a future period.
Do deposits in transit need a journal entry?
No — they're already in your books. They appear on the reconciliation as an addition to the bank balance and self-clear when the bank processes them in a future period.
What is the difference between an outstanding check and a stale check?
An outstanding check has been issued but not yet cashed. A stale check is an outstanding check that's been outstanding for so long (typically 6+ months) that the bank may refuse to honour it.
How long can an outstanding check stay outstanding?
Banks typically honour checks for 6 months. After that, they're considered stale-dated. Most US states require you to escheat (turn over) the funds to the state after 1–3 years if the recipient hasn't surfaced.
Why do deposits in transit happen?
Cut-off timing. You record the deposit when you take it to the bank or hit 'submit' in mobile deposit; the bank records it after their next batch processing window. Weekend and holiday deposits are the most common offenders.
Track outstanding items automatically across every recon
BankReconPro tracks open outstanding checks and deposits in transit across periods so nothing falls through the cracks.