Hi Jeno -
Thanks for the quick reply!
One of the issues is that the original invoice balance due was much higher than the deposit amount that was refunded. We did create a refund check, but the outstanding balance was still there from the original invoice balance due. So it wasn't the same amount refunded compared to the original invoice - hopefully this makes sense.
In the morning we will go through all of these steps that you are recommending and I will follow up if that solved the problem.