Let me try one more time:

A negative AR balance can be Refunded. This can be done Manually, by listing AR for that customer name on the Expenses tab of the check to that customer. Then, in Receive Payment, Do not put an Amount; you are receiving 0 payment. Your check as AR will be listed as if it is an Open Charge and you can Apply the credit from here. Using a Credit memo to issue this refund or issuing from an overpayment Creates the Same Check as I just described: AR.