A Federal Tax Refund comes into your FI and shows up on your exception list because the savings account number is 232425 and there is no such savings account number. You should return the entry ____.

The correct choice for returning the entry is associated with the situation where there is a discrepancy with the account number, specifically when the account doesn't exist at all. In this case, returning the entry using the appropriate code helps the originating financial institution understand the reason for the return.

The return code that corresponds to "No account exists" is recognized as R04. Utilizing R04 communicates clearly that the entry has been rejected due to the absence of the specified account at the receiving institution. This code is important in the ACH network as it informs parties involved that the transaction could not be completed because the account number provided was invalid or did not exist.

In contrast, the other codes denote different circumstances. For example, R01 signifies insufficient funds, R07 is for authorization issues, and R10 relates to uncollected funds. Each of these codes pertains to specific situations that do not align with the absence of the account number scenario presented in the question. Thus, R04 is the correct and appropriate return code for a Federal Tax Refund entry when no such savings account number exists at the financial institution.