Whether you enter a new bill or not relates to If you owe the vendor again. There is no Bill to enter for handling Returns.

You enter the vendor credit, to show for the date you Returned something to them. This creates an AP Credit. Now two things are possible: Either they will apply that to your next purchase from them, or you will get refunded.

If you get a Refund, that is the entry as AP for the vendor name:

1. If they put it on the Credit Card, you use Enter Credit Card Credit, enter AP, for that vendor name.

2. If they send a Check or put it on the checking account for the debit card you used, then you use Enter Deposit for the Vendor name and as AP.

Both methods require you to now go to pay bills, where the refund looks like a Bill that is unpaid, and you can apply the Vendor Credit to the refund.

If you manually take something to the vendor as a return, and they already refunded the credit card, then put the refund directly on the Credit Card Credit; list what you returned and already got refunded right here. There is No Need to also make a vendor credit first; you already Got the refund for that same date as the return.