Can you please help with regards to proper recording process of returned supplier payments?

You can record a bank deposit affecting the same expense account you used in the original transaction.

Here's how:

1. Hover over + Create and select Bank deposit.
2. Choose an account from the Account dropdown.
3. In the Add funds to this deposit section, enter the supplier who issued the refund in the Received from column, select the same Account used for the original expense and enter the amount of the refund.
4. Select Save and close.

Check out this article for other methods of recording a refund depending on how you originally recorded the purchase: Enter supplier credits and refunds in QuickBooks Online.

Please feel free to post again if you have other QuickBooks-related inquiries. We're here to help.