Go to Billing | Payment > List > then choose the invoice for which you want to create a credit note.
When the page opens, click on the ‘CREATE CREDIT NOTE’ tab as show in the picture below:
On the next page, below ‘Credit note to correct invoice… a) select ‘Create Credit Note with lines from the origin invoice [see number 2] – VERY IMPORTANT b) Enter the day c) Payment Terms d) Payment Type