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Welcome to the Community space, @mdillonacctg.
Allow me to grab this opportunity to help you and get this sorted out.
To get around this, you’ll need to link the refund check to your customer’s credit. This way, we'll zero out the unapplied cash balance. Let me guide you on how to do it in QuickBooks Online (QBO):
You can also read the Step 2:Link the refund to the customer’s credit or overpayment section in this article for more details: Record a customer refund in QuickBooks Online.
Let me also share this link that can guide you on how to link a deposit to an invoice.
In case you have other concerns or questions managing your transactions in QBO, you can always tag me in. It’s always my pleasure to help and keep you in working order. Have a great day ahead!