Correct way to deal with a credit note in 1.8.7

[Maf. King]

Hi List,

I hope someone can help me with this - 

I've been using 1.8.7 for a while for business accounts, and I am having 
difficulty with entering details for a vendor who has issued a credit note, 
to rebate a bill which overcharged me.

My first thought was to enter it in GC as a "negative bill" - which made my 
AP add up, but then when I paid the balance in the normal way, I ended up 
with the bills due reminder still wanting an additional payment.  

So I unposted the "negative bill" and tried to make a payment from the 
relevant expense account, which also didn't work. (couldn't transfer from 
the expense account in the payment dialogue)

I also tried a manual refund from the expense account to the AP account, but 
then the bills due reminder still didn't know about the refunded credit 
note.

Anybody got any suggestions how I can make GC cope with this situation 
correctly?

I'm sure that someone out there must have met this problem before!

TIA,
Maf.