Customer has purchased items and made full payment, now returning items

Sometimes there comes a situation, when customer has purchased items and made full payment but now he is returning some items and how to process his payment.

Here are the steps:

a. Suppose he has purchased items worth 100 rs (INV1) and made full payment (RCV1)

b. and he is returning goods worth 40 rs

1. We'll edit his receipt (RCV1), change amount 100 to 60 and write 40 in advance payment.

2. Create Sales Return/Credit Note (SLR1) for 40 rs and set off against original invoice (INV1)

3. Make Expense entry (PAY1) and pay 40 rs to customer

4. Now check ledger report, it will show you everything in detail.