Refunds from vendors should be credited back to the expense category that applied to the purchase. For example, if you purchased office supplies for $500 and then returned $100 worth of the supplies, you just need to credit the Office Supplies expense account so the net of the purchase totals $400. If that was the only Office Supplies expense you had for the year, you would enter $400 for the office supplies expense category on your Form 1065 return.
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