First, I would cancel the furniture that's on back-order(if possible), and work with the client to figure out a suitable price for the carpets and walls since they are already done.
And I would sit the client down and have them go over my plans for how to fix the situation before actually doing them. And also show them why I cannot refund them.
And I would try to find someone else to buy the high-end office furniture at a comparible price to what was spent on it.