QB Issue Resolution:

In QB desktop, you should see Apply Credits screen with an option to pick credit memo.

 

Check payment preference selection for receive payments.
(Top Edit menu > Payments > Company > Receive Payments).
You can turn off automatically apply payments box if needed.

 

 

apply credits.png Apply Credits

2017-10-03 (1).png Payments Preferences

Resolution for Issue 'Cant apply credits' available: Yes (Solved).
Source: Intuit Community forum.

Cant apply credits: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.

Support for apply credits
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Error Recovery for apply credits [Canada]
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