document what happens from the vendor's point of view when a customer gets a refund

A software vendor asked me today what exactly happens when a
customer gets a refund. I don't really know the answer. What is
the exact money flow? How long does each step take? What is the
normal process and how do we handle corner cases?

If I understand correctly, this is what happens (ideally):

  - A specific product costs $3.50, of which $2.80 will go to the
    vendor.
  - During a given billing period, 10 users buy that product
    ($3.50 x 10); $35.00 gets deposited in Canonical's account
    (minus merchant fees, which I'll ignore for now).
  - 1 user requests a refund, and it is approved. $3.50 leaves
    Canonical's account.
  - At the end of the billing period, $25.20 ($2.80 * 9) goes to
    the vendor's account for the 9 successful purchases.

Is this correct?

What happens if a refund occurs in a different billing period
than it was purchased in? Are there ever any cases where a
vendor could get a negative payment due to having more refunds
than purchases? How are vendors notified that a refund happened?

This should probably be documented somewhere on the site for
vendors, so they will understand how it works.