User Activity

I have lost or cant find an item which has been sold. I have refunded the buyer through Paypal with a note of apology. Do I have to cancel from the drop down menu against the sale or does the Paypal refund suffice? I dont want to get a defect as this...
Ebay advised a buyer is not pleased with purchase & wants to send it back. I am supposed to send a return post label but dont understand how to do this. Can someone please help me?
Kudos From