Hello, I sent a payment to a contractor but it was returned to us due to a wrong account number. The direct deposit cannot be voided, so would anyone know what Journal entry to create to offset the transaction?
Create a deposit in the checking account and use a clearing expense account as the source account for the deposit
then make the payment to the vendor and use that same clearing expense account as the expense for the payment
the clearing expense account will then be zero. When you reconcile mark off the clearing expense account transactions, deposit and expense against each other
Thank you very much for your feedback. Just to be clear - I have an uncategorized transaction in the bank feed (the money that was returned due to an incorrect bank account number). I am not sure how to create a clearing account and it could be used in this scenario described above?
Thank you!
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