How to cancel part of the sale invoice

2

First of all, you should not have raised the sales invoice for £450, because you had not done the work, so the customer did not owe you any money. This also unnecessarily raises your taxable income on your books, because this amount is not really income in the accounting sense. The correct approach, if the customer required documentation before paying the advance deposit, would have been to use a sales quote, because it has no financial impact. See this Guide:

https://forum.manager.io/t/creating-sales-quotes/7238

Once the customer paid the deposit, handle it according to this Guide:

https://forum.manager.io/t/customer-deposits-and-advances/7093

Then, when the customer decided to back away from the deal, you need two transactions:

  1. A sales invoice for the minimum charges, to which you are entitled. This will be automatically paid from the deposit as long as the deposit was handled as described in the 2nd Guide above.

  2. Spend money from a cash account to refund the remainder of the deposit, allocating the transaction to Accounts receivable and the customer’s subaccount. (That is where the deposit is recorded, as a contra receivable.)

So that’s how you should do things in the future. If, by chance, you never actually sent the sales invoice to the customer, you could delete the errant sales invoice and re-enter everything as above. In fact, in that case you can skip the sales quote step.

But if the sales invoice actually was sent to the customer, you should not delete or modify it, because that would destroy part of your accounting history. (Until it actually leaves the company, it has no real effect.) So the recovery steps will be different. However, until you describe exactly what you did with the deposit, etc., I can’t tell you what they will be. So please provide further information:

  1. How did you enter the £250 from the customer? What kind of transaction did you use, and what account did you post it to?

  2. How did you enter the £160 refund? Again, what kind of transaction, and which account? And what exactly did you do about VAT, since you say the minimum charges were subject to it, but the £160 makes no allowance for it.

  3. What do you mean when you say, “I…credited my account showing due balance from customer?” How did you credit which account?

Until we can sort this out, I recommend that you delete any credit note or journal entries you made. You say you “…could not succeed.” But you didn’t say why or why not. Until we can clarify what you did with the two actual money transactions, everything else is a distraction.