Correct way to handle credits and refunds

[timzak]

Mike or Penny Novack wrote:
> 
> timzak wrote:
> 
>>On the occasional time I've had to return a purchase, the amount credited
>>seems to appear in my Income section.  Is this correct?
>>
> No --- a credit for return is a negative expense item (completely of 
> partially canceling out an expense). To record it as an income item 
> overstates both income and expense.

I guess what I'm asking is, if I credit an expense item, is it correct for
it to show in the Income/Expense Report as income?

Here's a real example, now that I'm in front of GnuCash:

my wife was attending a chiropracter for some time.  Her co-pay was $10.  On
one occasion, the chiropracter accidentally charged her $40 instead of $10. 
So they credited the card $30.  So for that month, we paid $110 for doctor's
co-pays, with a single $30 credit.  The net amount was $80 paid to medical
co-pay, but GnuCash, in it's Income/Expense Report, shows medical co-pay as
a $110 expense under Money Out, and a $30 credit under Money In.  GnuCash's
report shows, under Money In, a series of Income:source line items, along
with a single line item Expense:Medical:Co-pay.  It is odd seeing the report
showing an "expense" under an Income category.  This is the root of my
original question.

So I guess my question is, is it correct for the report to be showing that
credit as an "expense" under Income?

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