A vendor received an extra payment via ACH. It was returned to us by the bank. How do I show that the overpayment was returned?

Let me make it up to you by ensuring you can record the returned overpayment in QuickBooks Online (QBO), Linda. 

We can create a bank deposit affecting Accounts Payable to record the returned overpayments. Then,  link the bank deposit to the vendor credit using the Pay Bills.

Here's how to create a bank deposit:

1. Go to the + New option and click Bank Deposit.
2. Under Received From, select the vendor's name.
3. In the Account drop-down menu, choose Accounts Payable.
4. Fill in the needed fields.
5. Click Save and Close. 

After that, proceed to pay bills. Here is how:

1. Go to + New.
2. Choose Pay Bills.
3. Select the bank deposit you just created. You will see the amount of the vendor credit in the Credit Applied field. The Total payment should be $0.00.
4. Click Save and Close.

Here's an article to ensure that everything is correct and that your deposits match what you have in your bank. Here's a link for more details: Reconcile an account in QuickBooks Online.

Let me know if you have other questions about handling vendor overpayment. I'm always here to help. Take care.