R12.1.3 - Earned Discount for Credit Memo application on Invoice

We have a $100 invoice which has 1% discount if paid before 30-Jun-2013. The customer has a $99 credit memo outstanding. He wants this credit to be applied on invoice and use the discount to close the invoice. However when credit memo is applied on invoice there is still $1 balance remaining on the invoice. Does standard R12 functionality allow discounts when credit memo is applied on the invoice?