diff --git a/src/wallet.js b/src/wallet.js
index 8c7ab56..ec19147 100644
--- a/src/wallet.js
+++ b/src/wallet.js
@@ -135,31 +135,35 @@ var Wallet = function (seed, options) {
       return value == undefined
     }
 
-    // Processes a transaction object
-    // If "verified" is true, then we trust the transaction as "final"
-    this.processTx = function(tx, verified) {
+    this.processTx = function(tx) {
         var txhash = convert.bytesToHex(tx.getHash())
-        for (var i = 0; i < tx.outs.length; i++) {
-            if (this.addresses.indexOf(tx.outs[i].address.toString()) >= 0) {
-                me.outputs[txhash+':'+i] = {
-                    output: txhash+':'+i,
-                    value: tx.outs[i].value,
-                    address: tx.outs[i].address.toString(),
-                    timestamp: new Date().getTime() / 1000,
-                    pending: true
+
+        tx.outs.forEach(function(txOut, i){
+            var address = txOut.address.toString()
+            if (isMyAddress(address)) {
+                var output = txhash+':'+i
+                me.outputs[output] = {
+                    output: output,
+                    value: txOut.value,
+                    address: address,
+                    scriptPubKey: convert.bytesToHex(txOut.script.buffer) //TODO: txOut.scriptPubKey()
+                    // timestamp: new Date().getTime() / 1000,
+                    // pending: true
                 }
             }
-        }
-        for (var i = 0; i < tx.ins.length; i++) {
-            var op = tx.ins[i].outpoint
+        })
+
+        tx.ins.forEach(function(txIn, i){
+            var op = txIn.outpoint
             var o = me.outputs[op.hash+':'+op.index]
             if (o) {
                 o.spend = txhash+':'+i
-                o.spendpending = true
-                o.timestamp = new Date().getTime() / 1000
+                // o.spendpending = true
+                // o.timestamp = new Date().getTime() / 1000
             }
-        }
+        })
     }
+
     // Processes an output from an external source of the form
     // { output: txhash:index, value: integer, address: address }
     // Excellent compatibility with SX and pybitcointools
@@ -276,6 +280,18 @@ var Wallet = function (seed, options) {
         throw new Error('Unknown address. Make sure the address is from the keychain and has been generated.')
       }
     }
+
+    function isReceiveAddress(address){
+      return me.addresses.indexOf(address) > -1
+    }
+
+    function isChangeAddress(address){
+      return me.changeAddresses.indexOf(address) > -1
+    }
+
+    function isMyAddress(address) {
+      return isReceiveAddress(address) || isChangeAddress(address)
+    }
 };
 
 module.exports = Wallet;
diff --git a/test/fixtures/mainnet_tx.json b/test/fixtures/mainnet_tx.json
new file mode 100644
index 0000000..f42bd7b
--- /dev/null
+++ b/test/fixtures/mainnet_tx.json
@@ -0,0 +1,4 @@
+{
+  "prevTx": "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",
+  "tx": "0100000001576bc3c3285dbdccd8c3cbd8c03e10d7f77a5c839c744f34c3eb00511059b80c000000006b483045022100a82a31607b837c1ae510ae3338d1d3c7cbd57c15e322ab6e5dc927d49bffa66302205f0db6c90f1fae3c8db4ebfa753d7da1b2343d653ce0331aa94ed375e6ba366c0121020497bfc87c3e97e801414fed6a0db4b8c2e01c46e2cf9dff59b406b52224a76bffffffff02409c0000000000001976a9143443bc45c560866cfeabf1d52f50a6ed358c69f288ac50c30000000000001976a91477890e8ec967c5fd4316c489d171fd80cf86997188ac00000000"
+}
diff --git a/test/wallet.js b/test/wallet.js
index 37aa4f7..a7161e2 100644
--- a/test/wallet.js
+++ b/test/wallet.js
@@ -1,10 +1,15 @@
 var Wallet = require('../src/wallet.js')
 var HDNode = require('../src/hdwallet.js')
+var Transaction = require('../src/transaction.js').Transaction
 var convert = require('../src/convert.js')
 var assert = require('assert')
 var SHA256 = require('crypto-js/sha256')
 var Crypto = require('crypto-js')
 
+var fixtureTxes = require('./fixtures/mainnet_tx')
+var fixtureTx1Hex = fixtureTxes.prevTx
+var fixtureTx2Hex = fixtureTxes.tx
+
 describe('Wallet', function() {
   var seed, wallet;
   beforeEach(function(){
@@ -234,6 +239,81 @@ describe('Wallet', function() {
     })
   })
 
+  describe('processTx', function(){
+    var tx;
+
+    beforeEach(function(){
+      tx = Transaction.deserialize(fixtureTx1Hex)
+    })
+
+    describe("when tx outs contains an address owned by the wallet, an 'output' gets added to wallet.outputs", function(){
+      it("works for receive address", function(){
+        var totalOuts = outputCount()
+        wallet.addresses = [tx.outs[0].address.toString()]
+
+        wallet.processTx(tx)
+
+        assert.equal(outputCount(), totalOuts + 1)
+        verifyOutputAdded(0)
+      })
+
+      it("works for change address", function(){
+        var totalOuts = outputCount()
+        wallet.changeAddresses = [tx.outs[1].address.toString()]
+
+        wallet.processTx(tx)
+
+        assert.equal(outputCount(), totalOuts + 1)
+        verifyOutputAdded(1)
+      })
+
+      function outputCount(){
+        return Object.keys(wallet.outputs).length
+      }
+
+      function verifyOutputAdded(index) {
+        var txOut = tx.outs[index]
+        var key = convert.bytesToHex(tx.getHash()) + ":" + index
+        var output = wallet.outputs[key]
+        assert.equal(output.output, key)
+        assert.equal(output.value, txOut.value)
+        assert.equal(output.address, txOut.address)
+        assert.equal(output.scriptPubKey, convert.bytesToHex(txOut.script.buffer))
+      }
+    })
+
+    describe("when tx ins outpoint contains a known txhash:i, the corresponding 'output' gets updated", function(){
+      beforeEach(function(){
+        wallet.addresses = [tx.outs[0].address.toString()] // the address fixtureTx2 is spending from
+        wallet.processTx(tx)
+
+        tx = Transaction.deserialize(fixtureTx2Hex)
+      })
+
+      it("does not add to wallet.outputs", function(){
+        var outputs = wallet.outputs
+        wallet.processTx(tx)
+        assert.deepEqual(wallet.outputs, outputs)
+      })
+
+      it("sets spend with the transaction hash and input index", function(){
+        wallet.processTx(tx)
+
+        var txIn = tx.ins[0]
+        var key = txIn.outpoint.hash + ":" + txIn.outpoint.index
+        var output = wallet.outputs[key]
+
+        assert.equal(output.spend, convert.bytesToHex(tx.getHash()) + ':' + 0)
+      })
+    })
+
+    it("does nothing when none of the involved addresses belong to the wallet", function(){
+      var outputs = wallet.outputs
+      wallet.processTx(tx)
+      assert.deepEqual(wallet.outputs, outputs)
+    })
+  })
+
   function assertEqual(obj1, obj2){
     assert.equal(obj1.toString(), obj2.toString())
   }