I can't see the furniture from here, but to me it sounds like you defrauded him -- you took money to do work that you didn't do, and are claiming to have done "some" work but apparently so little that your customer can't tell that you actually did anything. If somebody looking at your work would think that you did nothing or next-to-nothing, unless you plan to lie, what is your justification for keeping his $500?
You have given us no explanation for your failure to complete the work. Is it that you're incompetent? Lazy? How are we to know. The facts matter.
You also need to start following the basic rudiments of conducting business -- written estimates, and written agreements for work to be performed and the agreed price for the work, signed by the customer.

