The linking of the deposit to the vendor credit, shouldn't that be a NON-posting transaction or if it does create a journal entry, the amount should be 0 . Otherwise it would be creating a negative balance for AP again and it offsets the deposit of the funds back. To summarize: VC: dr A/P, cr Exp. Bank Deposit: dr Cash cr A/P (AT THIS POINT IT SHOULD BE FINE), but when the link is done via check/bill pay instructed above, this creates the following journal entry: Billpay: dr AP cr Cash
