QB Issue Resolution:

Assuming you are going to re-issue the payment

in the chart of accounts create an expense account called clearing if you need to (you can make it an asset account if the word expense bothers you, the result is the same)

make a deposit to the bank for the amount of the returned check and use that clearing expense account as the source (from) account for the deposit

Issue the replacement check, and use that same clearing expense account as the expense for the check

the clearing account is now zero balance, no change to the P&L, the original bill is still paid as of the original date, and the QB bank listing will match the bank statement when you use reconcile.

Resolution for Issue 'Our company bounced a check. How do I categorize the “Return Posted Item” ? This is not a bank fee, but rather the amount of the check being returned to our account.' available: Yes (Solved).
Source: Intuit Community forum.

Our company bounced a check. How do I categorize the “Return Posted Item” ? This is not a bank fee, but rather the amount of the check being returned to our account.: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.

Support for being returned
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Error Recovery for being returned [Canada]
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