Go to Transactions>Miscellaneous Receipts>Vendor Refunds. Browse to find the original expenditure entry, enter the amount of the refund, the received date and a description. Click OK to save. Now you must deposit the funds and file a C-3. The refund will be listed on Line 1d of the C-3.
Note: The "vendor refund" feature will only work if you are using the campaign in which the original expenditure was entered.