The reversing of the wire should have been for the full $1500 including $40 of bank fees.

Thanks Alwyn. I am also wondering what date should I use to reverse payment... 

Invoice for $1500 was paid in March. In May we closed our bank. In June we received the cheque from the bank for $1460, but it didn't state what is it for. By the time we figured out what the money is for I have done my reconciliation and posted month end.  Now in August we have paid the vendor again. What date should I put for reversing transaction so I don't mess my bank reconciliations? 

Thanks

Hi Margaret: My preference has always been to date the reversal as at the date the cheque from the bank was deposited in your bank account. Yes, you may have your bank already reconciled but you would have had the payment of the first $1500 outstanding as it had not cleared your bank. If the deposit of the bank's cheque is dated back to the date of deposit it would show the deposit as outstanding on the reconciliation until it is matched to the reversing entry. These two entries would clear the outstanding entries from prior months and you would be able to show that on the reconciliation in August (or July if not yet completed.) 

Hi Margaret: My preference has always been to date the reversal as at the date the cheque from the bank was deposited in your bank account. Yes, you may have your bank already reconciled but you would have had the payment of the first $1500 outstanding as it had not cleared your bank. If the deposit of the bank's cheque is dated back to the date of deposit it would show the deposit as outstanding on the reconciliation until it is matched to the reversing entry. These two entries would clear the outstanding entries from prior months and you would be able to show that on the reconciliation in August (or July if not yet completed.) 

Actually the first 1500 was not outstanding as money has physically left our account. Money has returned 2 months later as a cheque, which I deposited and received in Sage. Now when I did reverse entry, to pay the invoice again, the reverse entry is outstanding... 

When the funds were received from the bank it should have been applied to the Accounts Payable module for the vendor. This entry would have been on a vendor invoice showing as a negative amount reversing original payment using the bank account. This would leave the Accounts Payable Vendor account with an outstanding invoice requiring to be paid. Then the second payment would be against the outstanding invoice.

That make sense. I assume it's too late to apply this now, since the bank reconciliation will be messed up. Is there a way I can balance $1500 now? 

Margaret, I don't know how big your bank statement and reconciliation is but Sage 50 current version can reverse the last reconciliation so that missing items like this can be accounted for properly. If necessary you can go back a couple of reconciliations by reversing one at a time. I would suggest going back the one or two months and making the entries correctly.

Yes, I believe that would be the best option... Thank you for all your help!