My case is a little different as I gave an employee $300 in cash, from bank account (recorded as personal Expense), then he returned it in full in cash… How do I record the returned money?
The first transaction should have been recorded as a payment. (You did not say how you recorded it.) The second should be recorded as a receipt. Both should be posted to the same account. But, because this was not an expense of the business, that account should be an asset account, something like Employee loans.