Here is the actual answer:
1. Record a Deposit of the vendor check:
a) Go to Make Deposits.
b) In the Received from drop-down select the vendor.
c) In the From Account drop-down, select Accounts Payable.
d) In the Amount column enter the amount of the refund.
e) Save & Close.
f) Note: If you need to group this deposit with others.
QB will not allow Undeposited Funds as the deposit to account when Accounts Payable is chosen as the from account in a deposit. Instead choose the Wash Acct as the Deposit To account, then make a JE from Wash to Undeposited Funds.
2) Record a Vendor Credit for the refunded amount:
a) Go to Enter Bills from the Vendors menu.
b) Select Credit and enter the Vendor name.
c) Select an Item or Account and enter the Amount.
d) In the Customer drop-down select the job.
e) Save & Close.
3) Link the deposit to the bill credit:
a) Go to the Vendors menu and select Pay Bills.
b) Select the deposit created in step 1.
c) Select Set Credits and apply the Bill Credit you created in step 2 then select Done.
d) Tap Pay Selected Bills and select Done.
