As a follow-up to the above (not sure why it posted 3 time!?!), I just tried and it cleared the Needs Attention message. The steps I took were:

- Delete the newly-created invoice that was created by following the link in the post above (this is the one you linked the returned payment to) - the Needs Attention Message will disappear once this is done

- Find the original returned payment in the bank account and delete the original returned payment

- Book an AJE to DR Unapplied Cash Payment Income and CR Undeposited Funds (this is to remove the auto-entry created when the original payment is deleted)