How to apply credit memo to Invoice and then pay the invoice

Hi,

Our requirement is to have a credit memo applied to the Invoice which reduces the amount of the invoice. I Did some reasearch and figured out that is not possible. when we apply a credit memo to an invoice(by pressing corrections button on the invoice screen) it only creates lines and distributions for the credit memo and does not update the invoice amount. When I try to pay the Invoice only, the full amount of the invoice is paid not the remaining amount.

Is my understanding correct?

Is there an API to apply credit memos?

Thanks,

Nidhi