Final answer:
A supplier would issue a credit note (option C) to a customer if they had overcharged the customer by £400, as this document acknowledges the debt owed to the customer because of the overcharge.
Step-by-step explanation:
When a supplier realizes that they have overcharged a customer, the appropriate document to issue would be a credit note. This document serves as an acknowledgment of the debt owed to the customer due to the overcharge and is essentially a way to refund the customer without transferring money. If the customer were to make another purchase from the supplier, the amount on the credit note could be used to offset the cost of this new purchase.
Let's review the options provided. A remittance advice is a document sent by a customer to a supplier to inform them of a payment being made; hence it is not applicable in this situation. A debit note is usually sent by a supplier to a customer when the customer has underpaid an invoice, which is not the case here. A supplier invoice is a request for payment for goods or services supplied, therefore it does not rectify an overcharge.
In conclusion, the correct document that would be issued by the supplier to acknowledge an overcharging error and provide a refund mechanism to the customer is C) a credit note.