You're on the right track in recording your vendor credit, @allen25glenn. Good job on that!

Thanks for conveying the complete scenario. I'll share additional information about handling Petty Cash in QuickBooks Online. This way, I can guide you accordingly. 

The credit will be transferred directly to that account if you pay the bill with a Petty Cash account. That said, you don't need to add the vendor credit from Petty Cash. 

Here's how to check: 

1. Go to the Expenses tab and select Vendor. 
2. Click the vendor name and open the Bill Payment. 
3. Check the Bank/Credit account field.
4. Modify it if need be. 

To check your vendor credit, go as follows:

1. Go to the Accounting tab and select Chart of Accounts. 
2. Locate and open the Petty Cash account. 
3. Review the transactions. 

Additionally, regularly reconciling your petty cash account is a good idea. Once you do, you can move your paper slips to your long-term record keeping because the transactions are in QuickBooks.

Furthermore, check out these articles below to know more about handling vendor credits and other related topics: 

• Handle vendor credits and refunds in QuickBooks Online
• Pay bills in Online Bill Pay

Please do not hesitate to ask your questions in the Community. You are always welcome to join us. Keep safe.