Making a sale to a customer is hard enough. Giving a refund back is even harder! But handling the accounting for customer credits and refunds is easy in QuickBooks.
When a customer returns items for which an invoice or cash sale has already been recorded, use the Credit Memo/Refunds window (located under the Customer menu) to record the return.
You can create a credit memo for the returned items and then apply the customer credit amount to the outstanding charges. Or, if the invoice is paid, you can choose to create a refund check to the customer based on the amount of the credit memo. Simply click the refund icon on the top right of the Credit Memo and choose Give refund. QuickBooks creates a refund check to the customer and automatically applies this refund to the credit memo!
When a customer requests an amount to be refunded on their credit card, simply issue a credit card refund using the QuickBooks Merchant Account Service, check the box "Process credit card credit when saving". QuickBooks automatically creates a Journal Entry for credit memos that you issue, and those transactions will appear in your Undeposited Funds account.

Alternatively, if a customer is returning all the items from an unpaid invoice, simply void the invoice. With the invoice displayed, choose Void Invoice from the Edit menu. Voiding the invoice, instead of deleting it, retains complete records of all sales and those unwelcome returns.