You didn’t say specifically, so everything I’m going to tell you assumes that Office account and Customer deposit account were created under the Cash Accounts tab. Whether they are accounts at a bank or petty cash funds does not matter. If that is not true, you have bigger problems, because the Cash Accounts tab is the only place Manager can record actual inflows and outflows of money to or from the business. I’m also assuming you are using accrual basis accounting.
When you raised the sales invoice, you should have selected the customer involved, who should have been predefined in the Customers tab. The £450 line item should have been allocated to some income account. I’ll refer to that here as Sales. The VAT tax code should have been selected. If any of those things didn’t happen, edit the sales invoice accordingly. The result would be an increase in Accounts receivable and Tax payable. (As an aside, this is another reason not to raise invoices for work not complete. You will end up remitting more to the tax authority than you should.) The Sales income account should also increase by the same amount.
When you received the £250 deposit, you should have entered a Receive money transaction under Office account, allocating it to Accounts receivable > Customer > Invoice #. That would decrease Accounts receivable. But it wouldn’t do anything to Tax payable, because the deposit has nothing to do with taxes. It also would not decrease the Sales account. If anything about that receipt doesn’t match what I’ve just written, edit it.
Now, create a new credit note. The best way is to copy from the sales invoice. However you create it, adjust the Amount to £390, because that is the amount you are reducing the sales invoice (450 - 60). Make sure the line item is allocated to Sales. Select the same VAT tax code as the original invoice. The result of this credit note is to reduce Sales income and Tax payable by corresponding amounts. It should also reduce the balance due on the sales invoice to zero, because now, the customer has actually overpaid. Finally, it will reduce Accounts receivable. Since you previously sent the sales invoice to the customer, send them the credit note, too.
Finally, we come to the refund. This should have been done with a Spend money transaction from Office account. The transaction should have been allocated to Accounts receivable > Customer, with the invoice number left blank. Assuming there are no other invoices pending with this customer, the Amount should be the balance of Accounts receivable for this customer, which is viewable under the Customers tab. Do not designate any tax code. This amount may not be £160 for two reasons:
- You said your minimum charge was £60. 450 - 250 - 60 does not equal 160.
- You have not figured in the effects of VAT.
Since I don’t know what your VAT rate is, I assumed a rate of 20% and ran the foregoing series of transactions through an example company for a fake customer (Around the Horn). The resulting entries and running balances in the customer’s Accounts receivable subaccount are as follows:
One caution: you may have mistyped your minimum charge in your original post as £60 instead of £90. That may be where you got your £160 refund amount. If so, the credit note should have been for £360 plus VAT and the numbers in my example would look like this, with a smaller refund:
So, when all is said and done, and with your actual VAT percentage, you may owe the customer more, or you may have overpaid them. If the latter, you might wish to just write off the difference.