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The following will guide you from Creating Credit Memo without Inventory Impact, Processing that Credit Memo to Cash Refund and Cutting a Check for that refund.

1. Create a Credit Memo without Inventory Impact.
   1. Sales > Activities > Invoices 
   2. Click New to open new Invoice screen.
   3. In the header,
      1. Set Type field to Credit Memo.
      2. Select customer in the Customer field
   4. In the grid area, 
      1. Select an item to return in the Item No. field
      2. Type in qty to be returned in the Shipped field, ex. 20.00
   5. Since this is a credit memo without Inventory Impact, uncheck Inventory Impact checkbox. This means that posting this transaction will not impact Inventory and COGS account.
   6. Click Post.
      
      
      1. GL entries for Credit Memo are as follows. 
         
   Select

2. Process Refund for Credit Memo

   in Receive Payments screen opens, click Post

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3. Sales > Activities > Receive Payments
4. Click New to open new Receive Payments screen.
5. In the header,
   1. Select customer in the Customer field
   2. Select payment method in the Payment Method field, ex. Cash.
In the grid area, 
1. Select the Credit Memo transaction created in Step 1
2. Click Post.
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1. GL entries for Receive Payments are as follows:
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6. Make a deposit for the Receive Payments where credit memo is selected.
   
   1. Cash Management > Activities > Bank Deposits
   2. Click New to open new Bank Deposit screen.
   3. Click Undeposited, and look for the Receive Payment transaction. 
   4. Select that transaction and click OK.
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   5. Click Post.
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      1. GL entries for Bank Deposit via Undeposited Funds.
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7. Note
   title Note:
   Before you can process a refund, make sure that the Customer is also a Vendor. To do that, open Customer record, click on Entity Type tab and add Vendor in the Type grid. Image Added

    

   Process Refund for Credit Memo.
   1. Sales > Activities > Invoices
   2. Open Credit Memo transaction

   3. Click Process Refund. This will automatically create a posted Invoice > Cash Refund type transaction and a ready to post Pay Voucher transaction
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   4. Pay Voucher Details screen is automatically opened. Click Post.
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      1. GL entries for Pay Voucher are as follows:
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   5. Click Process Payment to cut a check.
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   6. Click Print Check.
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   7. Report Viewer - Check Voucher will then be opened. Click Print to print the Check.
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   8. Close the Report Viewer, then close the Process Payments screen.