Hi there, @MPC6.

I appreciate you providing detailed information about the issue you're facing. The Unapplied Cash Payment Expense in the Profit and Loss report is due to floating bill payment transactions that aren't applied to a vendor bill.

In your scenario, you have created a deposit to an Accounts Payable account and a vendor credit. Since the deposit is categorized as an A/P account, it will offset the balance after entering the vendor credit. This will also cause your P&L report to show the Unapplied Cash Payment Expense account with a $0 amount after you paid the deposit. Here's a visual reference:

There are two options to correct this, ensuring the Unapplied Cash Payment Expense won't display in your P&L report.

The first option is whether you want to retain the vendor credit and have your future bill deducted from your current credit. You'll need to delete all transactions after paying the $3,000 bill and create a vendor credit the same as the one you created. A vendor credit transaction is enough for this situation.

The next option is whether you want a full refund of the $65 amount and deposit it to your bank. You'll also need to delete all the transactions after paying the $3,000 bill and create a deposit transaction. Ensure you categorize the deposit to an income account, such as Refund to Customer. The deposit transaction is enough for this situation and you'll never see the Unapplied Cash Payment Expense account in your Profit and Loss report.

It's also best recommended to consult your accountant to categorize your transactions to their appropriate accounts.

After categorizing everything successfully, you can consider reconciling your account to match every single record from your bank statement to your QBO records.

You're doing an excellent job keeping your transactions matched and accurate. Feel free to keep us updated with your business needs, as we are always here to assist you.