This is a terrible solution. The very set up you have duplicates the income! Matching the "Sales Receipt" does not categorize the income and when I did try to categorize things manually, the "PayPal Sales" are still showing up in my books as double income. I can't find any way to manually exclude the "sales receipts." I can't manually edit the PayPal Sales account nor even view the records! Also, QuickBook chokes on PayPal's temporary holds and sometimes records multiple transactions even after they've cleared. I'm at the point of disconnecting PayPal entirely and entering it in manually.
