To be able to create a refund check for a customer who has a credit on their account enable the following:
(Customer has a $50 credit on his account that you want to remove and pay via check to the customer)
Enable the option to create "Refund Check Journal Entries" in the Setup Wizard 
Now create a R-Type invoice for the amount of the check you are writing to the customer 
Choose the Tender tab. Then double-click the Check value box; or type -50 in the Check value box, and then press the key 
This will bring up the "Issue Refund Check" window where you enter in the details such as the check # and any comments 
Now that the check has been given to the customer and their balance is $0.00, the payment needs to be applied to the credit balance to remove it from the system.First go to Accounts Receivable - Payments on Account - New Payment 
Choose your customer, then Apply the payment against the credit balance 
See Camtasia file:
Video source: faq:refunds:refund-cheque.flv
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Author: mgregoire\\
Editor: arose\\
Last Edited: 17-Aug-2007
