@pbb2 

Credit memos require a product or service, not just an expense account.  Create a service or non-inventory product, and under 'Income account' on the product set-up screen, select that expense account.  Then, add that product/service to the credit memo.  That credit memo will then show as a reduction in the balance due on the customer's statement.  

@Rainflurry Thank you, I will give that a try!!

@Rainflurry I spent over an hour on the phone with QBO customer support this morning and got no where with my question.  They gave me a work around, but it did not accomplish what I was trying to do.  Your information was perfect.  The item for which I needed to prepare a credit memo now appears in my cost of goods sold because your instructions for how to set up the product/service item was spot on.  That is exactly what I had been trying to do, but didn't know to select the expense account for the income account.  Thank you so much!!

Happy to help.  Glad it worked!