How do I process a credit/refund from a vendor/expense?

I know the best way to use the vendor credit, @silverliningsolar.

Let's create a vendor credit and apply it as payment to an invoice in QuickBooks Online. I'll show you how:

1.  Go to + New.
2. Select Vendor credit or Receive vendor credit.
3. In the Vendor drop-down menu, select your vendor.
4. Enter the details of returned items. 
5. On the Amount column, add the $1,000.
6. Once done, click on Save and close.

Then, here's how to apply the credit to the bill:

1. From + New, select Pay bills or Pay bill.
2. Select the $500 bill from the list. 
3. You'll see the available credit with this vendor in the Credit Applied field.
4. Complete the transaction.

For more details, please see this article: Handle Vendor Credits and Refunds.

Lastly, I'd recommend running and customizing the Transaction List by Date report. This helps you track all the money paid to a vendor.

Please keep me updated if you have additional questions about the process. I'm determined to ensure your record is accurate.