Hi kc_kangas!

You're almost there. Let me assist you further in recording vendor refund.

It's great that you've selected A/P when recording the deposit. Also, it seems that you've created a credit already.

 
In order for us to link the deposit and the credit, you'll need to create a check or pay bills. We'll just need to make sure that credit was applied and the total payment amount is zero.

Please check this screenshot for reference:

You'll want to check the deposit and verify that the Account selected is Accounts Payable. This is the common reason why recording refunds like this causes issues.

I added this article if you need help in balancing your accounts: Reconcile an account in QuickBooks Online.

You can reply to this thread if you have other questions. Have a great one!