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Hi I overpaid a supplier by $164.  It was not noticed until I did the bank reconciliation. 

This is what I have done thus far:

• overpaid the supplier by $164 - multiple bills were paid using pay bills so cannot attribute the $164 to one expense type.
  
• edited the cheque amount to the actual amount paid
• received a payment from the supplier for the $164
• entered the payment using banking - make deposits. Received from was the supplier and the from account was accounts payable

This makes the bank reconciliation process work fine but I have -$164 in accounts payable and a credit against the supplier for the same amount.

I know I am missing a step and I am hoping someone out there can tell me where I went wrong?

I would suggest to change the payment you applied to the supplier less the $164.

If you received the refund within the same month, then you could choose to do nothing as it cancels each other out.  However, if you want to be completely transparent on the transactions that have occured, journal the $164 over payment to a suspense account or if you don't have one of those, accounts receivable.  Then when apply the deposit, just put it straight to the approprate account and not to a supplier.

Hope this helps.

Cheers

Carrie