I would create a vendor called Paypal Vendor - since paying with pay pal does not give you much details other than a date and an amount.

Then you would put those to uncategorized transactions.  As you will need to complete all the details for who you actually paid and what it was for:  You can then export that list of transactions that need further detail - get that information and update those transactions with correct info.

So Paypal Vendor - would then be changed to Joe Schmoe - For supplies