Thank you for the response but sadly it did not help.  Here's the process I followed: A) Entered Bill B) Paid Bill then C) Steps 1 & 2 went swimmingly but when I get to Step 3 there are no bills or credits (the vendor doesn't show up at all on the Pay Bills window). 

I do have "show all bills" selected.  This was for a bill from an internet provider that I paid after we had vacated the building.  They then sent us a check back.  Could this possibly be a Company Setting issue?

Scenario 1: The vendor sends you a refund check for a bill that is already paid

1. Record a Deposit of the vendor check:
Go to the Banking menu, then select Make Deposits.
If the Payments to Deposit window appears, select OK.
In the Make Deposits window, select the Received from drop-down and choose the vendor who sent you the refund.
In the From Account drop-down, select the appropriate Accounts Payable account.
In the Amount column, enter the actual amount of the Vendor check.
(Optional) Enter a memo, check number, payment method, and class.
Select Save & Close.

2. Record a Bill Credit for the refunded amount:
From the Vendors menu, select Enter Bills.
Select the Credit radio button to account for the return of goods.
Enter the Vendor name.
Select the Expenses tab and enter the Accounts on the original bill.
In the Amount column, enter the appropriate amount for each Account (the amounts may have to be prorated).
Select Save and Close.

3. Link the deposit to the Bill Credit:
From the Vendors menu, select Pay Bills.
Check the Deposit that matches the Vendor check amount.
Select Set Credits and apply the Bill Credit you created earlier then select Done.
Select Pay Selected Bills, then select Done.