I was confused on this step as well. I actually entered the rejected payment as an expense under the clients account and then applied the rejected payment to offset each other.

One thread says to create a new invoice, apply the rejected payment to the new invoice, delete the invoice, create an expense and then apply the rejected payment to the expense. Why not just not create an invoice to delete and only an expense? 

Am I missing something. Thread linked below for reference. I wasn't  sure if by doing this it creates something on the back end that I am unaware of? 

Emily,