Returns can be found in the Order menu. In this section, you can see all created returns from the order page. By editing a return you see the name of the customer, the order id, and the number of products that are pending for return. You can change the status of the return if it needs more information. Once you approve the return its status is automatically changed to Completed. 
Returns can be approved or declined both from the return page or from the order page they refer to.