Understanding Purchase Returns

Understanding Purchase Returns

Overview

This article outlines the concept of purchase returns, prerequisites, and step-by-step instructions on how to create a purchase return using the Purchase Receipt feature. Additionally, it explores the impact of purchase returns on stock levels and accounting ledgers.




1. What is a Purchase Return?

A Purchase Return occurs when a buyer returns previously purchased items to the supplier. This could be due to several reasons, including:


  • Defective goods: Items that are damaged or not functioning as expected.

  • Quality mismatches: Products that do not meet the agreed-upon quality standards.

  • Excess stock: Items that are no longer needed by the buyer.


In iVendNext, the Purchase Return feature ensures that the return process is seamless and accurately reflected in your inventory and financial records.



2. Prerequisites for Creating a Purchase Return

Before you can create a purchase return in iVendNext, ensure that the following prerequisites are met:


  1. Item Creation: The item being returned must already be created in the system. You can refer to the Item documentation for guidance on how to create items.


  1. Purchase Invoice or Purchase Receipt: You must have either a Purchase Invoice or a Purchase Receipt for the items you wish to return. These documents serve as the basis for the return process.


  • Purchase Invoice: A document that records the purchase of goods from a supplier.

  • Purchase Receipt: A document that confirms the receipt of goods from a supplier.


For more details on creating these documents, refer to the Purchase Invoice and Purchase Receipt documentation.



3. Steps to Create a Purchase Return Using the Purchase Receipt

Creating a purchase return in iVendNext is a straightforward process. Follow these steps to return items using the Purchase Receipt feature:


Step 1: Open the Original Purchase Receipt

Begin by opening the original Purchase Receipt against which the supplier delivered the items. This document contains the details of the items you wish to return.


Step 2: Create a Return

Once the original Purchase Receipt is open, click on Create > Return. This action will generate a new Purchase Receipt with the Is Return checkbox selected. In this new document, the Items, Rate, and Taxes will appear as negative numbers, indicating a return.


Step 3: Submit the Return Purchase Receipt

After filling in the necessary details, submit the Return Purchase Receipt. Upon submission, the system will automatically:


  • Decrease the item quantity in the specified warehouse.

  • Adjust the stock valuation by increasing the stock balance according to the original purchase rate of the returned items.



4. Impact of Purchase Returns on Stock and Accounting

When you create a purchase return in iVendNext, the system makes several adjustments to ensure accurate stock and financial records.


4.1 Impact on Stock

  • The Returned Quantity in the original Purchase Receipt (and any linked Purchase Order) is updated.

  • If 100% of the items are returned, the status of the original Purchase Receipt is changed to Return Issued.


4.2 Impact on Accounting Ledger

  • The Stock In Hand account is credited, reflecting the increase in inventory value.

  • The Stock Received but Not Billed account is debited, reducing its balance.


If Perpetual Inventory is enabled, the system will also post an accounting entry against the warehouse account to synchronize the warehouse account balance with the stock balance as per the Stock Ledger.




    • Related Articles

    • Understanding Purchase Invoices

      Overview This article outlines the process of creating, managing, and troubleshooting Purchase Invoices in iVendNext. 1. What is a Purchase Invoice? A Purchase Invoice is a bill you receive from your supplier against which you need to make a payment. ...

    • Understanding Sales Returns

      Overview In this article, we will explore how iVendNext simplifies the process of managing sales returns, from creating return entries to adjusting stock and accounting records. 1. What is a Sales Return? A Sales Return occurs when a customer returns ...

    • Best Practices for Managing Purchase Returns and Debit Notes

      Overview This article outlines the best practices for managing purchase returns and debit notes, helping you optimize your workflows and maintain accurate records. 1. Understanding Purchase Returns and Debit Notes Before diving into best practices, ...

    • Understanding Purchase Order Trends

      Overview This article shows you how to access and use the Purchase Order Trends report. It explains the report’s main features and how it can help you improve your procurement process by revealing patterns in purchase orders—such as frequently ...

    • Understanding Purchase Transactions

      Overview This article will guide you through the key components of purchase transactions, including Purchase Orders, Purchase Receipts, Purchase Invoices, and Payment Entries. 1. Key Components of Purchase Transactions Some of the key components of a ...