QB Issue Resolution:

deposit the check and use other income as the source account

if there is a current vendor credit in QB, deposit the check and use accounts payable as the source, on the same line in the customer name column select the vendor name, then use pay bills, select the “bill” the deposit created and click apply credits and pay the zero bill

Resolution for Issue 'how to record vendor refunds but not as credits.' available: Yes (Solved).
Source: Intuit Community forum.

how to record vendor refunds but not as credits.: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.

Support for Credits
Quickbooks Repair Pro will resolve it efficiently and affordably. Guaranteed resolution of your issue, or you pay nothing!

Error Recovery for Credits [Canada]
E-Tech is the #1 Quickbooks data migration and Conversion service provider.

Get 50% off Quickbooks Online

Click Here for 50% off!

Additional Support Options: