A refund through PayPal shows up as sales, how do I apply this to the expense it came from?

Hi there, @mat1@ymail.com. 

Are you trying to match a vendor refund to your expense transaction in QuickBooks? 

If so, this option is unavailable in the program. Since a vendor refund is a positive amount, you can't match it with a negative amount (expense). 

That being said, let me share with you the right steps to properly record this on QuickBooks. 

If you receive a refund for a business expense, you'll want to create a vendor credit and deposit the money to the account where it's coming from. Then, use Pay Bills to connect the bank deposit to the vendor credit.

Here's how to enter a vendor credit:

1. Click + New and select Vendor credit or Receive vendor credit.
2. In the Vendor dropdown, choose your vendor.
3. Depending on how you record purchases with this vendor, enter the Category details or Item details. Usually, this is the category, product, or service you’re getting credit for.
4. Select Save and close.

To deposit the money you got from the refund, follow these steps:

1. Click + New.
2. Select Bank deposit.
3. In the Account dropdown menu, choose the account where you got the refund.
4. In the Add funds to this deposit section, fill out the following fields.
   • Received from: Select the vendor who gave you a refund.
   • Account: choose Accounts Payable. Important: You need to pick Accounts Payable so you can tie the refund to the vendor credit. This may seem a little strange, but it’s the best way to do this.
   • Payment method: Enter the method your vendor used to refund you.
   • Amount: Enter the amount of your refund.
5. Click Save and close.

Finally, use Pay Bills to link the bank deposit to the vendor credit. Here's how:

1. From the left menu, select + New.
2. Click Pay bills.
3. Select the bank deposit you just created. You’ll see the amount of the vendor credit in the Credit Applied field. The Total payment should be $0.00.
4. Click Save and close.

Once done, you can now match the downloaded refund to the bank deposit you've just created. You can use the Find match section to manually locate the transactions from your existing records. Just make sure that the filtered are dates correct. 

If you’re not sure about this process, ask your accountant for further advice.

I've added this article for your future task when you're ready to assess your business financials with QuickBooks: Reconcile an account in QuickBooks Online. This contains how you can undo or fix errors in case you bump into one.

Get back to me if you have other concerns in QuickBooks. I'll be around to answer them all for you. Keep safe and have a good one!