I tried searching for answers to this issue, but was surprised to find that nothing addressed this not uncommon issue.

We had a customer that was invoiced for a purchase and paid with a credit card. It turns out it was a fraudulent credit card. Recently, we received notice that the merchant account issued a chargeback. Here are my specific questions:

1. What to do with the invoice in which we charged sales tax? Do I post a CM? But it would have to a Misc charge or something since this was an inventory invoice (that we wont be getting the product back)

2. Would the CM leave the payment open? What would I do about that.

3. The merchant service issued the chargeback, do we then record this as a manual check entry to say, bad debt or merchant fee

Thanks for your help.

Matt