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The tutorial on Microsoft Dynamics 365 Business Central covers the process of creating and applying a credit note for sales returns or invoice cancellations. It explains that if invoices are unpaid, users can reverse transactions using the Correct or Cancel functions on posted sales invoices. For paid invoices, a Sales Credit Memo or Sales Return Order must be created. To initiate a sales credit memo from a posted sales invoice, users should search for "Posted Sales Invoices," select the desired invoice, and then use the Correct function followed by Create Corrective Credit Memo. The video illustrates this process and how to apply credit notes to one or more ledger entries.