To issue a refund on an order that is already invoiced in Magento
DO NOT USE the Credit Memo button from the Information Section of the Order as seen below
First click on the Invoices Tab and then Click on the Invoice you want to Refund
Once you are viewing the Invoice you want to Refund, click the Credit Memo button
Then specify the Qty to Refund for Each Item on the Order and then click the Update Qty's Button
In this example we are going to refund 3 of the NCR Receipt Printers
This will update the line item detail as seen here
Once you have finished making changes to the Credit Memo and you are ready to issue the Refund
Click on the Refund button
You will then get a notification that the credit memo has been created
If you login to your Authorize.net, Paypal, etc account you will then see the Refund
Example of an Authorize.net Refund
Note: After completing the Credit Memo process in Magento make sure you create a Return transaction in CounterPoint to reflect the items that you manually refunded in Magento