How to apply a customer credit to a different customer's invoice?

Section 1: Remove the Credit from the first customer

1. Identify the customer who has the credit.
2. Click Tasks, Payments.
3. Change Vendor ID: to Customer ID:
4. Select the customer who has the credit.
5. Change the Date to reflect the day you will transfer this credit to the other customer.
6. Change the Cash account to a liability account (Equity, AP, and Income type accounts work as well).
7. Enter the amount that will be transferred to the other customer.
8. Enter a Check/Reference No.:
9. Save the Payment.
10. Click Tasks, Receive Money.
11. Select the Customer that was chosen in Step 4.
12. Change the date to reflect the day you are clearing the credit from this customer.
13. Don't change the cash account.
14. Click Apply to Invoices: (if that tab doesn't already have the focus).
15. Place a check in the far right Pay column next to the credit (shows as negative number).
16. Place a check in the far right Pay column next to the payment (shows as a positive number) that was created in step 9 when you saved the payment.
17. Enter a Check/Reference No.:
18. Click Save (This completes the clearing of the credit from the first Customer's Ledger).

Section 2: Apply the credit to the other customer

1. Click Tasks, Credit Memos, and select the customer who will receive the credit.
2. Change the Date to reflect the day that this credit will be applied to this alternate customer.
3. Enter a Credit No.: (I.E. CM-OriginalInvoiceNumber that credit originated from).
4. Change the GL Account (under the Apply to Sales tab) to be the same as the liability account that you selected in Section 1, Step 6.
5. Click Save.
6. Click Tasks, Receive Money, and select the customer who you've created the Credit Memo for.
7. Set the Date to be the date that the second customer's invoice will be cleared.
8. Click Apply to Invoices: if it doesn't already have the focus.
9. Place a check in the Pay column next to the credit memo (shows as negative number) that you created in Step 1.
10. Place a check in the Pay column next to the invoice (shows as positive number) for which you wish to apply this credit.
11. This should be a zero dollar receipt.
12. Click Save.
13. Verify that your Aging report is clear.
14. Verify that the suspense account that was used shows the debit and credit for the balance transfer.

Note: This is similar to having a customer pay a vendor's bill

See I have a customer who is also a vendor, how do I handle this?