Sometimes, the company may receive the check as the payment for goods or services that it has provided to customers. Later, it will usually deposit such check into the bank. Hence, it needs to account for the check deposit with a proper journal entry to transfer the balance from cash on hand to the bank balance.
The check that the company receives from the customers is usually called the undeposited check. And in accounting, the undeposited check is usually reported as cash. Likewise, when the company receives the check from the customers for the goods or services it provided, it usually records it in the cash account. Hence, the check deposit journal entry is usually the same as that of the cash deposit.
Check deposit journal entry
The company can make the check deposit journal entry by debiting the bank account and crediting the cash account when it deposits the check into the bank.
This journal entry only moves the deposited amount from the cash account to the bank account. It doesn’t impact the balance sheet as a whole at all.
Check deposit example
For example, on Feb 2, 2021, the company ABC has deposited a $1,500 check into the bank.
In this case, the company ABC can make the journal entry for check deposit on Feb 2, 2021, as below: