I believe you will need to process a payment and apply it to both receivables. I don't think you can process a $0 payment, so generally I wait until there is an actual payment to process for this same customer/job and then apply the receipt of payment to all 3 invoices (the 2 offsetting invoices and the 1 normal invoice).

Thank you!  I will give that a try :)

Go to 3-3-1 Cash Receipts to apply the credit to the invoice.

I apply payments in 3-3-1 that are zero and use a Description of Apply Payments & Credits.  If I am looking back at what happened this notation allows me to look for the credit for clarification.

In the future, you can enter the invoice number in the "Apply to" field when processing the credit memo.  When saving, it should say that the invoice was found & do you want to apply the credit memo to it.

To clarify Elaine's suggestion, the field in the invoice header is the Reference# field. You would type in the Invoice# of the record to apply the credit against. A couple of things to remember are that this can only be done on a credit (negative) invoice, and once you you save the credit invoice you cannot go back and edit or add the Reference#. Also, make sure there are no duplicate invoice#'s to avoid having the credit apply against the wrong record.

Please don't use ever use the reference field to apply credits!  If you make a mistake the fix is much harder.  Instead enter the credit and save it.

Then apply the credit through cash receipts as a zero deposit.  If you have to make a correction you can just void the zero cash receipt.

Char,

Would you use the same method to write off uncollectilble AR?

Yes. To write off AR, enter credit in 3-2 to either reduce income ir increase bad debt expense. Then apply the credit to the open invoice balances. Then I use write off as the check number in 3-3-1 cash receipts.  
i do NOT recommend using the reference field because you CANNOT undo it if you make a mistake