Purchase Order Returns in Dynamics GP

Processing a purchase order return in Dynamics GP may seem difficult if you aren’t familiar with the process. One challenge is that the options you can choose depend on the status of your purchase order.

To help you better understand your options in purchase order returns, I will give an overview of each document type to help you determine which is right for your situation and walk through how to process a “Return” document type.

Table of Contents

Purchase Order Returns – Document Types & Rules

“Return” Document Type

The Purchase Order Processing “Return” return document type can be used when the following conditions are true:

  • A “Shipment” transaction has been posted against the Purchase Order.
  • A “Shipment/Invoice” or “Enter/Match Invoice” transaction has not been posted against the Purchase Order.
  • Received Items have not been sold, moved to a different Site, or removed from Inventory.

“Return w/Credit” Document Type

The Purchase Order Processing “Return w/Credit” return document type can be used when the following conditions are true:

  • A “Shipment” transaction has been posted against the Purchase Order.
  • A “Shipment/Invoice” or “Enter/Match Invoice” transaction has been posted against the Purchase Order.
  • Received Items have not been sold, removed from Inventory, or moved to a different Site.

Note:

The “Return” or “Return w/Credit” document types must be used for Non-Inventoried, Misc Charge, Flat Fee, or Service Inventory Item Types.

You cannot process Return documents for Kit items.

You must complete two return transactions if purchase order items have been fully received but partially invoiced. First, you would process a “Return w/Credit” for the item received and invoiced. Second, you would process a “Return” for the items received but not yet invoiced.

“Inventory” Document Type

The Purchase Order Processing “Inventory” return document type can be used when the following conditions are true:

  • A “Shipment” transaction has been posted against the Purchase Order.
  • A “Shipment/Invoice” or “Enter/Match Invoice” transaction has not been posted against the Purchase Order.

Additionally, one of the following is true also:

  • A Vendor credit transaction should not be issued.
  • The item quantity was transferred to a different site after it was received.
  • The item was sold and then returned by the customer.
  • Item quantity was added to inventory through an adjustment or variance transaction.

Note:

An “Inventory” return document type can also be used for items in Drop-Ship Purchase Orders that were returned by the customer. This is possible if the invoice transaction has not been matched to the purchase order.

When you process a return using Return Type “Inventory,” if the items being returned will be replaced by the Vendor, you must make adjusting journal entries to remove the “Accrual Purchase” entry created by the new “Shipment” Receipt.

“Inventory w/Credit” Document Type

The Purchase Order Processing “Inventory w/Credit” return document type can be used when the following conditions are true:

  • A “Shipment” transaction has been posted against the Purchase Order.
  • A “Shipment/Invoice” or “Enter/Match Invoice” transaction has been posted against the Purchase Order.

Additionally, one of the following is true also:

  • A Vendor credit transaction should be issued.
  • The Item quantity was transferred to a different Inventory Site after processing the Purchase Order Receipt.
  • The Items were sold and then returned by the customer.
  • Item quantity was added to inventory through an adjustment or variance transaction.

Note that when you process a Return w/Credit or Inventory w/Credit return document, the system will create a return transaction in Payables; however, the return transaction must be manually applied to the vendor’s invoice.

Determine Which Purchase Order Return Document Type

Based on the above Return document type rules, and prior to processing a Purchase Order Return, the Purchase Order and Purchase Order Line statuses should be reviewed.

Additionally, any related posted transactions should be reviewed to help determine which type of Return Document can and should be processed.

This could include:

  • PO “Shipments” Receipt transactions.
  • PO “Shipment/Invoice” Receipt transactions.
  • PO “Enter/Match Invoice” transactions.
  • Inventory Negative Adjustments, Negative Variances, and Inventory Site Transfers.
  • Sales Invoices posted against Item quantities received.

You can use a variety of Purchase Order and Inventory windows to assist in this process.

A few are referenced below, and details on how to use these windows will be shown in the How to Process a Return Document Type section below.

Purchase Order Returns – Additional Options

Replace Returned Goods

Mark to request that the vendor replace returned goods using the original purchase order when the return type is Return or Return w/credit. A new purchase order will be created if the original purchase order has been moved to history or the return type is Inventory or Inventory w/credit.

Replace Returned Goods works in conjunction with the Invoice Expected for Returned Goods option.

Invoice Expected for Returned Goods

Mark to confirm that the vendor invoice will include the original receipt quantity of goods.

Invoice Expected for Returned Goods works in conjunction with the Replace Returned Goods option.

Using Replace Returned Goods/Invoice Expected for Returned Goods

When choosing how returned goods are invoiced, you may combine the Replaced Returned Goods and Invoice Expected for Returned Goods fields. To determine which combination of options to choose, please refer to this Microsoft Documentation.

How to Process a “Return” Document Type

You can begin processing a “Return” document type once you have determined you need to return the product received on a Purchase Order. Ensure that you have reviewed all related transactions and have confirmed the following:

  • A Purchase Order “Shipment” was entered and posted.
  • A Purchase Order “Invoice/Match” transaction has not been entered or posted.
  • The product received on the Purchase Order has not been sold, transferred, or removed from Inventory.

You can confirm the above using a combination of the following inquiry windows in the Purchase Order and Inventory modules.

Confirm Purchase Order Related Transactions

Purchase Order Processing Document Inquiry

Purchasing >> Inquiry >> Purchase Order Documents

Using the “Purchase Order Processing Document Inquiry” window, confirm the transactions processed against the Purchase Order.

In this example, PO2085 was created, and a “Shipment” Receipt transaction was posted.

Screenshot in the Purchase Order Processing Document Inquiry window highlighting the PO Number and the Receipt No.

Edit Purchase Order Status

Purchasing >> Transactions >> Edit Purchase Order

Using the “Edit Purchase Order Status” window, confirm that the status of the Purchase Order Line Item is as expected.

Screenshot in the Edit Purchase Order Status window highlighting the Quantity Rejected to Date, Quantity Shipped to Date, Quantity Replaced, Quantity Invoiced to Date as well as the Received fields.

Updated Quantities:

  • Quantity Ordered = 25
  • Quantity Cancelled = 0
  • Status = Received.
    • Changed from “Released” to “Received” after the Shipment Receipt was posted.
  • Quantity Rejected to Date = 0
  • Quantity Shipped to Date = 25
    • Changed from 0 to 25 after Shipment Receipt posted.
  • Quantity Replaced = 0
  • Quantity Invoiced = 0

Purchase Receipts Inquiry

Inventory >> Inquiry >> Receipts

You can use the Purchase Receipts Inquiry window to view information about an Item’s Purchase Receipts. This window allows you to view Receipts posted to all Inventory Sites or specific Sites. You can also restrict your view to a specific date range. Please note that decrease adjustments will not be displayed in this window; instead, they will appear as “Quantity Sold.”

Use the “Purchase Receipts Inquiry” window, to confirm the value in the “Quantity Sold”, “On Hand”, and “Available” fields.

Note: You cannot process a “Return” document type for item quantities in the “Quantity Sold” and “Allocated” fields.

Screenshot in the Purchase Receipts Inquiry window highlighting the Item Number, Quantity Received, Quantity Sold as well as the Quantities on hand and available.

Updated Quantities:

  • Quantity Received = 25
    • PO Shipment Receipt Quantity.
  • Quantity Sold = 0
    • The “Quantity Sold” value will reflect posted Sales Invoices, Negative Inventory Adjustments, Inventory Transferred to other Sites, and Returned quantities.
  • Quantity On Hand = 25
    • Current quantity from Shipment Receipt.
  • Quantity Available = 25
    • No Current Allocations.

Enter and Post the Purchase Order “Return” Document Type

Purchasing >> Transactions >> Returns Transaction Entry

Based on the “Purchase Order Return – Document Type Rules” and Purchase Order Line-Item status noted above, we have determined we can process a “Return” document type.

Enter the Return Transaction – Header

Screenshot in the Returns Transaction Entry window highlighting the type as Return and the "Replace Returned Goods" box marked off.

Fill out the following fields as required:

  • Type – Select “Return”.
  • Return No. – Use the default system-assigned number.
  • Vendor Doc. No. – Enter a document reference if desired. This is not a required field.
  • Date – Enter a date/posting date to record the Return.
  • Batch ID – Enter/create a Batch ID if batch posting is selected.
  • Vendor ID – Enter or select the Vendor ID.
  • Vendor Name – Will default once the Vendor ID is selected.
  • Currency ID – Enter or select a Currency ID if you use Multicurrency.
  • Replace Returned Goods* – Mark if you want to request the Vendor replace returned goods using the original Purchase Order. In this example, I have marked this setting.
  • Invoice Expected for Returned Goods* – Mark if the Vendor Invoice will include the Items being returned.

* See the “Purchase Order Returns – Additional Options” section for more details on the “Replace Returned Goods” and “Invoice Expected for Returned Goods” selections.

Enter the Return Transaction – Line Items

Screenshot in the Returns Transaction Entry window highlighting the PO Number, Item, and Receipt No. along with the Inventory Account and the Purchase Price Variance fields.

Fill in the following fields as required:

  • PO Number – Enter or select the PO Number to return.
  • Item – Enter or select the Item Number to return.
  • Receipt No. Enter or select the Receipt Number to return.
  • U of M – the Unit of Measure will default to what was entered on the PO “Shipment” Receipt.
  • Quantity Returned – The Quantity Returned will default to what was entered on the PO “Shipment” Receipt.  You can choose to return a portion of the original amount received.
  • Unit Cost – The Unit Cost will default to what was entered on the PO “Shipment” Receipt.
  • Inventory Account – The Inventory Account will default to what was entered on the PO Receipt.  In most cases, this account number would not be changed.
  • Purch. Price Variance Account – The Purch. Price will default to what was entered on the PO Receipt. In most cases, this account number will not be changed.

Post the Return Transaction – Line Items

Purchasing >> Transactions >> Return Batches

Once Data Entry is complete, post the Return Transaction or Return Batch.

Screenshot in the Returns Batch Entry window highlighting "Post" and the Batch ID as PO Returns.

Confirm the Purchase Order “Return” Document Type Posting

Purchase Order Processing Document Inquiry

Purchasing >> Inquiry >> Purchase Order Documents

Once the “Return” Document is posted, you will see an entry for the Return transaction in the “Purchase Order Processing Document Inquiry” window.

Screenshot in the Purchase Order Processing Document Inquiry window highlighting the PO Number range, the "Include" boxes marked, and the Return Document Type.

Edit Purchase Order Status

Purchasing >> Transactions >> Edit Purchase Order

Screenshot in the Edit Purchase Order Status window highlighting the updated Quantities.

Updated Quantities:

  • Quantity Ordered = 25
  • Quantity Cancelled = 0
  • Status = Released.
    • Because the “Replace Returned Goods” setting was marked on the Return, the Line-Item Status changed from “Received” to “Released”. The PO Line can be received again.
  • Quantity Rejected to Date = 0
  • Quantity Shipped to Date = 0
    • changed from 25 to 0 after the Return was posted.
  • Quantity Replace = 25
    • changed from 0 to 25 after the Return was posted.
  • Quantity Invoiced = 0

Purchase Receipts Inquiry

Inventory >> Inquiry >> Receipts

Using the “Purchase Receipts Inquiry” window, confirm the values in the “Quantity Sold”, “On Hand”, and “Available” fields after the PO Return posting.

Screenshot in the Purchase Receipts Inquiry window highlighting the updated quantities.
  • Quantity Received = 25
    • PO Shipment Receipt Quantity.
  • Quantity Sold = 25
    • Value reflects the quantity returned after the PO Return Posted.
  • Quantity On Hand = 0
    • No quantity On-Hand after the PO Return is posted.
  • Quantity Available = 0
    • No quantity is available for Allocations after the PO Return is posted.

Purchase Order “Return” Document Type Posting Effect

Inventory Module

Inventory >> Inquiry >> Item Transaction

  • The PO “Shipment” Receipt transaction added Item Quantity to the inventory.
  • The PO “Return” transaction reduced the Item Quantity in inventory.
Screenshot in the Item Transaction Inquiry window highlighting the Return quantities.

Accounts Payable Module

Purchasing >> Inquiry >> Transaction by Vendor

  • The PO “Shipment” Receipt transaction did not affect the AP Module.
  • The PO “Return” transaction had no effect in the AP Module.
Screenshot in the Payables Transaction Inquiry window highlighting the Vendor ID, and the Include boxes marked off.

General Ledger Module

  • The PO “Shipment” Receipt posting (RECVG) created a Journal posting in the GL.
  • The PO “Return” transaction posting (PORET) was created, reversing a Journal posting in the GL.
Screenshot in the Account Transactions General Ledger highlighting the PO Shipment and PO Return lines.

Registration Setup

If you have selected “Purchase Order Processing” in the Dynamics GP Registration window and are currently processing Purchase Orders, no additional setup is required.

Screenshot in the Registration window highlighting the Purchase Order Processing toggle being selected.

Security Role Assignment

Proper Security Roles may need to be granted to Dynamics GP Users to access this functionality.

The following “default” Dynamics GP Security Roles/Tasks can process Purchase Order Returns.

Screenshot inside of GP Security Roles showing the default Tasks and Roles that can process Purchase Order Returns.

For support and advice tailored to your specific situation, please feel free to contact us. We’d love to help you.

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