I am trading a gym membership with a Vendor to pay down an invoice. How should i track the credit? I added as a payment but not sure what account in should go into.

This is bartering.  There a lot of mean to record it, however, the easiest is to receive a payment in the amount of the membership and apply against the invoice balance.  When making a deposit, drop down a line and add the expense account used to track gym memberships and entered the same amount as a negative so that the deposit total is zero.

This is not what happens, for Barter: "When making a deposit, drop down a line and add the expense account used to track gym memberships and entered the same amount as a negative so that the deposit total is zero."

For Barter, you need to understand that you are tracking what you Owe the vendor for, but instead of paying in Funds, you bought something on their behalf.

Like this:

You pay for 6 memberships, but 1 is not your business cost. You post that as Other Current Asset = not for your business, but this other party.

Now, you enter a bill for what you owe them, such as Janitorial services or whatever it is you need to pay them for. The point now, is, the Bill is not going to be paid by Money. Put a Negative on the next line and post the same Other Current Asset. This way, the bill is 0 due; you cleared the Other Current Asset balance, and you have an entry that captures for the vendor name the Gross expense that you "paid" them for, just not as money.

And you should stop this sort of trade. A Barter is always the same as money, and in reality, you would never buy a membership for just anyone. That isn't a business activity at all. A Barter is more typically done because, for instance, we are customers and vendors to each other, both ways, so Barter allows us to swap the values for legitimate business activities while avoiding unnecessary Banking.

And now you have Vendor Reportable 1099-Misc Box 7 activities. You don't get that from using a negative on a Bank Deposit.

No one said gym membership was tax deductible, but it is an expense to the company and the adjustments is made on the tax return, not the books.

Yes, Gym Memberships can be Deductible as expense, as Payroll compensation, or a source of revenue. We really don't know enough about this party to answer that part.

But "Trading" it is Barter. It is in lieu of Funds, but still that Value. So, the "traded" part means in lieu of money.

This makes no sense: "and the adjustments is made on the tax return, not the books."

Yes, you track it properly "in the books" because it was used instead of Funds, which doesn't change the nature of the financial activity being Traded.

If I run a Gym and trade you janitorial services for gym use, that still is Income and Expense. There is no "Book/Tax" adjustment. I track that we didn't trade Money; we Bartered Value.

If I pay to give you a gym membership in lieu of you paying for your own, and you are my vendor, we Bartered that I should enter the Gross Service Cost you provide to me, and what I paid to the Gym is Other Current Asset = vendor Prepayment; not Gym. I apply that to the gross I owe you for services to end with new, Net, banking. There is no "Book/Tax" adjustment. I track that we didn't trade Money; we Bartered Value.

Wanting to make lots of adjustments later, isn't how a business person sees and manages how these activities are handled properly to be able to have a true management perspective of their operations and activities.

You are incorrect about the book to tax adjustment.  Yes income is recognized on the sale and an expense is recognized on the books in the same amount.  When the tax return is prepared, the gym membership is a nondeductible item and requires and adjustment to the tax return.  No different than 50% of meals and entertainment not being tax deductible.  You do not record only 1/2 of the expense.

@QBsguru

I don't see where it was recommended to enter only 50% of anything, and the TCJA of Dec 2017 changed the Entertainment rules. Further, as I already noted, we don't know enough about this person's operation to give the type of tax advice you seem to be giving.

You never give up on anything.  I am not suggesting tax advise, just how to book the transactions correctly and leave it to the tax preparer to handle the adjustments.  Do you have a real job?