How to replace a vendor's cheque that has been lost

Method 1:Reverse the Payment ((Not recommended due to impact on bank reconciliation and vendor history)

1. In the Payables (Vendors and purchases) module, click Payments
2. At the top of the Payment window, click Payment, Lookup a payment, and select the payment you made
3. When the payment is on the main screen, Click Payment, Reverse a payment
4. In the same payment window, click the drop-down list and select the vendor
5. Enter the payment you want to do beside the invoice
6. Print and post your cheque.

Method 2: Record the Reversal and Reimbursement ( This method will allow you to reverse the cheque at a different date and is recommended for accurate record-keeping)

1. In the Payables (Vendors and purchases) module, click Payments
2. Select the vendor under "Pay to the order of."
3. Click on Payments, then Include fully paid invoices
   
4. Beside the cheque number, note "Reversing cheque number XXXX" with the date the funds were returned
   
5. Locate the invoice that was paid and enter the original amount in Payment amount using a negative sign
6. Post the cheque
7. In the same payment window, click the drop-down list and select the vendor
8. Enter the payment you want to do beside the invoice
9. Print and post your cheque for re-issuance.
   
   

Handling a Bank's Refund of vendor payment:

Make a general journal entry with the bank credit and a corresponding debit to an appropriate account, such as a miscellaneous income account. This records the reimbursement without affecting your cost of goods.

Important Disclaimer:

Do not delete the original payment entry. This preserves the accuracy of your bank reconciliation and maintains the integrity of the vendor history. It reflects the actual occurrence: the cheque was issued, cashed, and the funds were returned.