{
  "question_id": "CG-P1B-FULL-098",
  "slug": "how-outstanding-lodgements-are-treated-in-a-bank-reconciliation",
  "display_title": "How are outstanding lodgements — deposits recorded in the books but not yet credited by the bank — treated in a bank reconciliation?",
  "format": "article-v2",
  "applies_to": {
    "countries": [
      "US"
    ],
    "frameworks": [],
    "tax_year": null,
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  "general_concept": true,
  "summary": "A deposit your books recorded but the bank had not credited by the statement date is a deposit in transit. Add it to the bank statement balance, leave the book balance alone because the receipt is already recorded, and carry it on a list until the bank's credit appears on a later statement. One that never appears is not a timing difference, and it must be investigated.",
  "body": "## What counts as an outstanding lodgement?\n\nIn U.S. usage the item is called a deposit in transit: a deposit that was made by the business and recorded on its books but has not yet been recorded by the bank. Outstanding lodgement, outstanding deposit and uncredited deposit are names for the same item. Two conditions define it, and both must hold at the statement date:\n\n- **The books have it.** The receipt is recorded in the bank account in your ledger, dated on or before the statement date.\n- **The statement does not.** No matching credit appears on the bank statement for that period.\n\nBecause the books already contain the receipt and the bank's record does not, the difference sits entirely on the bank's side. That single fact decides the treatment.\n\n## Which balance does it adjust, and in which direction?\n\nAdd it to the balance shown on the bank statement. The bank has not yet counted money the business has, so the statement balance is understated by the amount of the deposit; adding the deposit brings the bank side up to what the books show.\n\nThe book balance is left alone, and no journal entry is made. The transactions the business already knows about have been recorded in its records; only items the bank knows about and the business does not need a book entry. A deposit in transit is the opposite case: the business knows, and the bank has not caught up.\n\nThis is the mirror of an outstanding check. An uncleared check is subtracted from the bank balance because the books have already taken the money out; an uncredited deposit is added because the books have already put the money in. Uncleared checks are covered in the question on outstanding checks.\n\n## How do you find them?\n\nCompare your own record of what was taken to the bank with the credits on the statement, item by item:\n\n1. List every deposit recorded in the bank account in your ledger during the statement period, and bring forward last period's list (step 4). Work from the deposit records themselves: deposit slips, mobile-deposit confirmations or the deposit batches in your software.\n2. Tick off each one that appears as a credit on the statement, matching the amount and the account.\n3. Any recorded deposit with no matching credit is a candidate for the list.\n4. Bring forward last period's list and tick off the items the current statement now shows as credited.\n\nMatch on amount and account, not just date. Several customer payments taken to the bank together show on the statement as one deposit for the total, so compare the deposit total to the credit, not each payment. Matching downloaded bank-feed transactions to recorded deposits is covered in the question on bank-feed matching; recording the deposit itself is covered in the question on recording a bank deposit.\n\n## Where is the cut-off for a deposit made near the statement date?\n\nThe list is drawn up as at the statement date, so the test is simple: a deposit belongs on this period's list if the books record it on or before the statement date and this statement does not show it as credited.\n\nDeposits made on the last day are the usual source of these items. Under federal Regulation CC, funds may be considered deposited on the next banking day when they are deposited on a day that is not a banking day for the bank, or after a cut-off hour the bank sets for receiving deposits, if that hour is 2:00 p.m. or later (12:00 noon or later for deposits at ATMs, contractual branches or off-premise facilities), and banks may set later cut-off hours for different types of deposits and locations. Deposits left in a night depository count as deposited on the day the bank removes them and they are available for processing. A deposit you make late on the statement date may therefore be treated by your bank as deposited the following banking day and appear on next month's statement. It still belongs on this period's list, because your books correctly record it on the day you made it.\n\nCheck the cut-off from the other direction as well. If a deposit is recorded in the books on the statement date but was not actually taken to the bank until after it, the book entry is dated too early: at the statement date that money was still on hand, not in transit. Keep the receipt in the period, but not in the bank account: at the statement date reclassify it to cash on hand or undeposited funds, and record the deposit to the bank account on the date it was actually made. It is then not a deposit in transit at the statement date and does not go on the list. The 450.00 check in the example below is handled this way.\n\n## How is the list carried forward and cleared?\n\nEach item stays on the list until the bank's credit for that item appears, and it comes off only then. Timing differences such as deposits in transit resolve in future periods, which is why the list is carried from one reconciliation to the next.\n\nAt the next reconciliation:\n\n- Tick each brought-forward item against the new statement's credits.\n- Remove an item when you can point to the credit that cleared it, and note the credit's date.\n- Keep any item without a matching credit on the list, flagged as brought forward.\n\nNever clear an item because time has passed. Removing an uncredited deposit without a credit either changes cash with no event behind it or forces an unexplained difference elsewhere, and a receipt that never reached the bank stops being visible.\n\n## How do you tell a timing difference from a mistake?\n\nEvery item on the list looks the same: a deposit in the books without a bank credit. Reconciling items should all be investigated as part of the reconciliation, and they may lead to corrections by the business or by its bank. Only the first of these outcomes is a true deposit in transit:\n\n| What the item turns out to be | How you know | What to do |\n|---|---|---|\n| A genuine timing difference | A deposit slip or confirmation dated on or before the statement date, and the credit appears on the next statement | Keep it on the list and add it to the bank balance until it clears |\n| Recorded but never taken to the bank | No deposit slip or confirmation; the checks or cash are still on hand or unaccounted for | Correct the books so the receipt is no longer shown as in the bank, and find out where the money is |\n| Recorded twice | Two entries in the books for the same deposit, one already matched to a credit | Remove the duplicate entry rather than carrying it; finding duplicates is covered in the question on duplicate bank transactions |\n| Credited for a different amount, or to a different account | A credit near the date that does not match the amount, or no credit in this account but one in another | Trace the difference separately and correct whichever side is wrong |\n\nEither the business or the bank can make the recording mistake. A deposit keyed into the books with an extra zero, or a bank credit posted to the wrong account, becomes a reconciling item that looks like a deposit in transit and will never clear on its own.\n\n## When should an uncredited item be investigated?\n\nInvestigate every item on the list as part of each reconciliation. As a working rule, a deposit made on or before the statement date is expected on the next statement; if it is still missing then, do not carry it again until the investigation below has settled what happened. Your bank's own published deposit-posting times, not this rule, say when a given kind of deposit ordinarily appears.\n\nThe investigation establishes:\n\n1. **Was the deposit made?** Find the deposit slip, teller receipt or mobile-deposit confirmation, and check its date and total.\n2. **Did the bank receive it?** Ask the bank to trace the deposit from that evidence.\n3. **Was it credited elsewhere, or for another amount?** Look for credits near the date in this and any other account at the same bank.\n4. **Is it in the books twice?** Search the ledger for a second entry with the same slip or total.\n\nUntil one of these is settled, the item cannot be called a timing difference, and it should not be closed out by an adjusting entry that makes it disappear. The investigation looks at what happened to the deposit; it does not assume who was responsible.\n\n## What if receipts come through a card or payment processor?\n\nIf your receipts arrive through a card or payment processor that pays out on its own schedule and combines many sales into one payout, the gap between recording the sales and the payout arriving is a settlement matter, not a deposit you took to the bank. Those amounts do not belong on the deposits-in-transit list. Listing them there to make the reconciliation close fills the list with items that will never clear one by one and hides the genuine deposits in transit. Tying a payout to the sales behind it is covered in the question on matching a processor's lump-sum deposit.\n\n## How does an undeposited-funds account relate to the list?\n\nMany businesses record customer payments first into a clearing account and record the bank deposit when the money is taken to the bank. In QuickBooks, the Undeposited Funds account acts as a temporary holding place for payments until you record a formal bank deposit.\n\nThe two are consecutive stages, and together they account for every receipt the bank has not yet credited:\n\n- **Still in the clearing account:** received, but not yet taken to the bank. These are money on hand, not deposits in transit.\n- **On the deposits-in-transit list:** taken to the bank and recorded as a deposit to the bank account, but not yet credited.\n\nReconcile the clearing account at the same time as the bank account. At the statement date its balance should equal the checks and cash actually on hand waiting to be deposited, item by item. Any residue has to be explained, not carried:\n\n- a payment you did take to the bank but never recorded as a deposit is moved out by recording the deposit, and then goes on the list if the bank has not credited it;\n- a payment that is neither on hand nor in a deposit is traced as a missing receipt;\n- an old balance no one can identify is investigated, never left to accumulate.\n\nAn item should never sit in both places. A receipt that is on the list and still in the clearing account has been recorded twice.\n\n## What does it look like from receipt to clearance?\n\nA business reconciles its checking account to the June 30 statement.\n\nOn June 29 it receives two customer checks, 1,200.00 and 800.00, and records them in its undeposited-funds account. On June 30 at 4:15 p.m., after its bank's 2:00 p.m. cut-off, it deposits both checks together at a branch and records a 2,000.00 deposit to checking. Another customer check for 450.00 arrives late on June 30 and is not taken to the bank until July 1.\n\n| Date | Account | Debit | Credit |\n|---|---|---|---|\n| June 29 | Undeposited funds | 2,000.00 | |\n| June 29 | Accounts receivable | | 2,000.00 |\n| June 30 | Checking | 2,000.00 | |\n| June 30 | Undeposited funds | | 2,000.00 |\n| June 30 | Undeposited funds | 450.00 | |\n| June 30 | Accounts receivable | | 450.00 |\n| Total | | 4,450.00 | 4,450.00 |\n\nAt June 30 the undeposited-funds balance is 450.00, matching the one check in the drawer. The 2,000.00 deposit is on the checking ledger but not on the June statement, which shows a balance of 18,640.00. One check for 1,140.00 has also not cleared. The ledger balance for checking is 19,500.00.\n\n| June 30 reconciliation | Amount |\n|---|---|\n| Balance per bank statement | 18,640.00 |\n| Add: deposit in transit, June 30 | 2,000.00 |\n| Less: outstanding check | 1,140.00 |\n| Adjusted bank balance | 19,500.00 |\n| Balance per books | 19,500.00 |\n| Adjusted book balance | 19,500.00 |\n\nOnce the reconciliation is prepared correctly, the adjusted bank balance and the book balance are the same amount. No entry is made for the 2,000.00. The 450.00 check is not on the list, because at June 30 it had not been taken to the bank.\n\nThe July statement shows a 2,000.00 credit on July 1. At the July reconciliation, the June 30 item is ticked against that credit and removed from the list. Nothing else changes, because the books recorded the deposit in June.\n\nHad the 2,000.00 been added to the book side instead, the books would show 21,500.00 against a bank side of 17,500.00 (18,640.00 less 1,140.00): a 4,000.00 gap, twice the deposit. A difference of exactly twice one deposit is a sign of this error, so check for it first.",
  "sources": [
    {
      "id": "REF::1",
      "url": "https://openstax.org/books/principles-financial-accounting/pages/8-6-define-the-purpose-of-a-bank-reconciliation-and-prepare-a-bank-reconciliation-and-its-associated-journal-entries",
      "title": "Principles of Accounting, Volume 1: Financial Accounting — 8.6 Define the Purpose of a Bank Reconciliation, and Prepare a Bank Reconciliation and Its Associated Journal Entries",
      "publisher": "OpenStax, Rice University",
      "published": "published April 11, 2019",
      "retrieved_at": "2026-09-18T16:07:16+00:00",
      "sha256": "f14171feeb982b4f890b638e22cee245a00889de0604a67ea5b54c6e23242ab8",
      "supports": [
        "C1",
        "C3",
        "C12"
      ]
    },
    {
      "id": "REF::2",
      "url": "https://www.accountingtools.com/articles/deposit-in-transit",
      "title": "Deposit in transit definition",
      "publisher": "AccountingTools, Inc.",
      "published": "March 15, 2026",
      "retrieved_at": "2026-09-18T16:07:16+00:00",
      "sha256": "2c803495e0ab02a5137eff00e5f3cbc18ebe24ab65f5d992da0cdaf5a91f22fb",
      "supports": [
        "C2"
      ]
    },
    {
      "id": "REF::3",
      "url": "https://www.accountingtools.com/articles/reconciling-item",
      "title": "Reconciling item definition",
      "publisher": "AccountingTools, Inc.",
      "published": "August 28, 2026",
      "retrieved_at": "2026-09-18T16:07:17+00:00",
      "sha256": "efb6cb120de0f0a3266de7ec135a95446770888fdc44de72f93628725a89295e",
      "supports": [
        "C8",
        "C9",
        "C10"
      ]
    },
    {
      "id": "REF::4",
      "url": "https://www.law.cornell.edu/cfr/text/12/229.19",
      "title": "12 CFR § 229.19 Miscellaneous (Regulation CC)",
      "publisher": "Legal Information Institute, Cornell Law School",
      "published": "undated",
      "retrieved_at": "2026-09-18T16:07:18+00:00",
      "sha256": "4ed32dc8822b9723efdd38f656fc3f02b0bd52f4fa63116eeeda404743ba2668",
      "supports": [
        "C5",
        "C6",
        "C7",
        "C13",
        "C14",
        "C15"
      ]
    },
    {
      "id": "SRC::968196b1f5cdd085",
      "url": "https://quickbooks.intuit.com/learn-support/en-us/help-article/bank-deposits/whats-undeposited-funds-account/L6Jan3iRK_US_en_US",
      "title": "Managing your Undeposited Funds account",
      "publisher": "Intuit Inc.",
      "published": "last updated 8/3/2026",
      "retrieved_at": "2026-09-09T05:25:09+00:00",
      "sha256": "c0eeae116d7c8614d052e0348e1674c747910976b8c6f7ec8bb4ed6584a559f3",
      "supports": [
        "C4",
        "C11"
      ]
    }
  ],
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      "question_id": "CG-P1B-FULL-059",
      "slug": "how-outstanding-checks-are-treated-in-a-bank-reconciliation",
      "display_title": "How are checks that have not yet cleared the bank (outstanding checks) treated in preparing a bank reconciliation, and what does that look like in an example?"
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      "question_id": "CG-MCE-036",
      "slug": "my-card-processor-deposited-one-lump-sum-that-doesn-t-match-any-day-s-sales-how",
      "display_title": "My card processor deposited one lump sum that doesn't match any day's sales — how do I tie a payout to the sales, fees and refunds behind it?"
    }
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  "datePublished": "2026-09-20T15:54:17Z",
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  "question_text": "How are outstanding lodgements — deposits recorded in the books but not yet credited by the bank — treated in a bank reconciliation?",
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