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