Record Returned Inventory Itemsadmin
You can create a credit note to record the return of an inventory item you have purchased or sold. In case you are using the ledger or Cash Book then you can use spend money to record the return of an inventory item.
When a Customer Returns an Inventory Item
In such a case you have to add a customer credit note(Link) and select the inventory item code for the returned product. To reflect the return and to increase the quantity on your hand for the tracked inventory item you have to approve the credit note. To reverse the amount posted at the time item was sold, it adds a credit in the cost of goods sold account.
What you can do with the credit note will totally depend on whether the returned item has been paid for:
- In case the invoice for the sale of the item hasn’t been paid then you can allocate the credit note to the invoice to reverse the amount due for the item.
- In case the sales invoice has been paid and you want to refund your customer then you can record the refund on the credit note.
- In case the sales invoice has been paid and the customer wants to use the credit later, you can leave the credit note unallocated.
- In case the initial sale was recorded using a receive money transaction, and you want to issue a refund, then you can record a refund on the credit note.
- There might be a reason, the returned item isn’t being added back to your stock, for example, if it’s damaged then you need to enter a decrease quantity adjustment to correct the quantity on hand. Decrease quantity adjustments are valued at the current average cost of the item. Therefore, you may then need to add a revaluation adjustment to correct the item’s total value.
When you Return a Purchased Inventory Item
In case your supplier issues a debit note for an inventory item you’ve returned then add the item’s code when you enter the debit note(Link) in Clickentry. This will correct both the quantity on hand for the item and the value in the inventory asset account.
Record Returned Inventory Items on a Ledger or Cashbook Plan
If the organisation is on a Ledger or Cashbook plan you won’t have the option to enter credit notes.
To record a refund to a customer for returned goods, create a spend money and add the following transaction lines:
- A line to reverse the original sales amount – this creates the refund amount for your customer.
- A line where you select the inventory item being returned – this updates the quantity on hand for the item.
- A negative line matching the line for the item, but coded to the cost of goods sold account – this credits the cost of goods sold account.
To record the return of an inventory item you’ve purchased:
- You have to post a decrease quantity adjustment(Link) for the returned inventory item and add code to a suspense type account. It may be needed to revalue the leftover stock after decreasing the quantity on hand. Import inventory items into Clickentry
- In case your supplier refunds you for the returned items, you need to enter a receive money transaction for the refund coded to the suspense account.