Thank you for your reply. To clarify my circumstances:

Per #2: The journal entry was just to allocate the security deposit portion of the full payment to the liability account. I.e., It takes the payment and keeps $400 in A/R and designates $100 as liability (the Security Deposit account). I'm not saying that's correct, just that it's what I read to do to designate the $100 as something I had to refund at some point. Should I not even bother with that?

I tried the Credit Memo method (instead of Refund Receipt), and found I also had to enter a bank deposit of -$100 to show the removal of the security deposit from bank account ZZZ (where it was deposited). Applying the Receive Payment ended up with an extra entry in Security Deposit (if I remember right...I tried so many things). However, I had the initial journal entry there as before, so again, is that not something I should be doing and just keep the full payment as A/R and not try allocating to Security Deposit?

And While I have you, is there a way to streamline this through Quickbooks Online. I see a Refund option in the original payment, but in my tests with small payments ($3), it didn't give me an option to do a partial refund. Is that an option for larger amounts, like $100+? I only used Merchant Account, because I don't have access to credit card details and didn't know another way.