Create a Debit Memo (i.e. return inventory to the Vendor)

Debit Memos are used to return items to your Vendor. There are 2 types of Debit Memo, Associated and Unassociated.

Associated Debit Memos (Step 2 below) are tied to an original Purchase Order and offers very tight control over the inventory Lots being returned and their value. Use this approach if Lot tracking is important in your operation.

Unassociated Debit Memos (Step 3 below) are more flexible in allowing the user to determine the value of the returned items and to select (or ignore) Lot selection without regard to their original source PO.  Use this process if Lot tracking is not important in your operation.

1. Open the Purchase Order window.

Navigate to Purchasing ➤ Purchase Events.

Open the Purchase Order window.

2. Create an Associated Debit Memo

  1. Highlight the original Purchase Order that has the items you are returning to the Vendor.
  2. Open the Action Menu and select Create Debit Memo.
Create an Associated Debit Memo

2.1. Create a reversing debit memo for the selected PO?

Select OK to confirm that you want to Create a Debit Memo.

Create a reversing debit memo for the selected PO?

2.2. The Debit Memo.

The Debit Memo will have negative quantities on all of the original line items that the Purchase Order was issued for. You can modify these quantities and remove some of the line items if this is just a partial return.

When/if you are changing the quantity of items to return, be sure to enter a negative quantity. After you do this you'll still need to "receive" the returned items. Click on the Receiving tab to proceed.

The Debit Memo.

2.3. "Receive" the items being returned.

This process is identical to receiving items on a Purchase Order with one exception: You will need to select the Lot Number that the items are being returned from.

  1. Highlight the line item to return
  2. Enter the Event Date.
  3. Click the Receive Selected button.
  4. Enter a Lot Number. (You may also change the quantity of this return shipment, if necessary. In most cases this quantity will not change.)
"Receive" the items being returned.

2.4. You must specify a Lot Number.

If you don't select a Lot Number you will see this error message. AcctVantage will not allow the Debit Memo to be saved without choosing a Lot Number to return from.

You must specify a Lot Number.

3. Create an Unassociated Debit Memo

Open the Action Menu and select Create Debit Memo without highlighting an original PO.

Create an Unassociated Debit Memo

3.1. The Debit Memo.

The Debit Memo will be blank, enter the Vendor and Line Items as you would with a Purchase Order. The QTY however will be negative. The Unit Cost may be adjusted to match the value being allowed by the Vendor.

After entering the line items you'll still need to "receive" the returned items. Click on the Receiving tab to proceed.

The Debit Memo.

3.2. "Receive" the items being returned. (Copy)

This process is identical to receiving items on a Purchase Order.

  1. Highlight the line item to return
  2. Enter the Event Date.
  3. Click the Receive Selected button.
  4. Enter a Lot Number. This step is optional. If you ignore the Lot Number field, AcctVantage will automatically draw from the oldest inventory available.

If you're returning Non-inventory Products, then you won't be able to select the Lot Number. Lots are only used for Inventory.

"Receive" the items being returned. (Copy)

4. The Debit Memo in the List View.

The Debit Memo will look just like any other Purchase Order in the List View, except there will be negative dollar values.

The Debit Memo in the List View.

5. Post the Purchase Event

If you're returning Non-inventory Products, there will not be any Purchase Events created.

In order for the Debit Memo to take effect on your General Ledger, the Purchase Event must be posted. You can either cross-reference from the Purchase Order to the Purchase Event window and post using the Action Menu or go to General Ledger ➤ Post Transactions. Both methods will accomplish the same thing.

When this Purchase Event for the Debit Memo is posted, AcctVantage will:

  • Credit the Inventory Asset account associated with the returned items.
  • Debit Accrued Inventory Payable (e.g. AIP or Inventory Holding) for the value of the Debit Memo.
  • Debit/Credit the Cost Adjustment account (found in System Setup) for the difference between Inventory Value and Debit Memo value. (new in AV 13.1.0.4)

When your Vendor receives the returned items they should return a Credit Memo to you. The Credit Memo will need to be entered via the Voucher screen just like any Vendor Invoice. When you enter this Voucher, the Voucher Amount will be negative and you will offset it by applying it to the Open PO Line Item that is a Debit amount.

Post the Purchase Event