Urgent: Issue with creating Customer Refund from AR to AP

URGENT REQUEST FOR HELP

Hi All        

Currently unable to demonstrate to customer the Refund process in AR for non-credit card transactions.

Setup steps completed as follows:

Created Activity Code with type = Refund

Set Transaction Source 'Receipt Handling for Credits' to 'Refund'

Created Invoice and applied this to a receipt.

Selected receipt and tried to apply this to 'Refund' but received error message "Error: You cannot enter a refund for this receipt because the receipt has not been remitted"

Tried to create remittance but no receipts are available to select in remittance batch.

Is there some further setup steps required relating to remittances that I am missing?