I've got your back on recording returned check in QuickBooks Online (QBO), @Kay_T.
When you create a sales receipt to record the returned check from a vendor, you don't have to set the vendor up as a customer. Thus, you'll just have to leave the Customer field blank when creating the sales receipt.
You can also create a vendor credit for the returned check. This way, the transaction will show in the Vendor transaction list and will be credited to the Expense account and debited to the A/P account.
In addition, I suggest seeking help with your account when creating JE for the incorrect payment to Accounts Payable. This way, they could guide you on which option to take based on your recording practice and business needs.
As always, feel free to visit our QuickBooks Community help website if you need tips and related articles in the future.
Please keep in touch if there's anything else I can do to help you succeed with QuickBooks. I've got your back. Have a great day!
