Thanks for chiming in on this thread, @Khisrav. I appreciate you for providing in-depth details of your concern about documenting these transactions and the returned amount. I'm glad to share the steps on how you can track this properly in QuickBooks Online (QBO).

Since you have already paid the bill, we can record a supplier credit for the refunded amount. Then, create a bank deposit for the same amount that went back into your bank account. Here's how to create a supplier credit:

1. Click the + New button and pick Supplier credit.
2. Choose the supplier in the Payee field.
3. Depending on how you record purchases with this vendor, enter the Category details or Item details.
4. Enter the KES 26,900 in the Amount field.
5. Complete the necessary fields, and hit Save and close.
   
   

Once done, let's record a bank deposit and use Accounts Payable (A/P) to proceed with linking it to the supplier credit.

1. Click the + New button and then Bank Deposit.
2. In the Add funds to this deposit section, pick the supplier who gave you a refund under the Received from dropdown.
3. Select the Creditors account (Accounts payable) in the Account field.
4. In the Amount field, enter the KES 26,900 for the refund.
5. Tap Save and close.
   
   

Lastly, use Cheque to connect the bank deposit to the supplier credit. Here's how:

1. Click the + New and select Cheque.
2. Pick the payee and choose the Supplier Credit and Deposit (from the drawer that appears on the right-hand side) and add them both.
3. Balance should be 0 as they will cancel each other out.
4. Select Save and close.
   
   

For more details about the process, please refer to this article: Record a customer refund or supplier refund in QuickBooks Online.

Furthermore, if your bank is connected to QBO, make sure to match it to these entries when they show up in the For Review tab so they won't duplicate your transactions. Check out this article to learn more about doing it: Categorise and match online bank transactions in QuickBooks Online.

Our door is open 24/7 if you still need further assistance with recording a supplier refund transaction. Just post here again if you have any additional QuickBooks-related concerns. We'll be more than happy to have you here again, @Khisrav!

Thanks, @Kevin_C  it worked perfectly, I appreciate 

Thanks for getting back to the thread and adding a confirmation, @Khisrav.

I'm glad that the steps shared by my colleague Kevin_C work perfectly on your end.

If you have any additional concerns, please add your details to this thread and I'll help you out. Have a good one. 

Using this senerio, what Payment Account should be used when doing the application of the Vendor Credit, if the vendor issued an credit note for and invoice that has not yet been paid.?

Welcome to the Community forum, Ruby6201. I'll be here to provide you with the necessary information, but first, I'll need to clarify a few things.
 
To start, may I know the specifics of your concern? Are you referring to selecting a Payment Account when recording a Vendor Credit? You can also provide all necessary screenshots for us to have a visual reference of your concern.  
 
Any additional detailed information is greatly appreciated, as it will help me provide an accurate resolution.
 
Come back to this post with those details, and I'll be sure to offer support and assistance to you, Ruby6201. In the meantime, have a great day!