SOLUTION:

Go into Receive Payment on an Invoice. It will auto populate, but ignore that. Under Amount Received at the top of the payment window, enter $-0-. Then mark the box to the left of the invoice, it will populate with the full amount of the invoice. At this point at the very bottom you will see "Amount to Credit" is a negative amount. Now mark the box to the left of the Credit Memo. It will auto populate with the open balance of the CM, which should match the payment amount you put in on the line above. Now at the very bottom it should say Amount to Apply, which should equal your CM and then Amount to Credit will be zero. Save and close. This is a rather convoluted way of doing it imo, but this is how it is done.