Purchase Return

A Purchase Return is the return of goods that have already been bought from a supplier. It is usually the case when products are defective, damaged, not up to standard, or no longer needed by the buyer.

ERPNext enables you to handle Purchase Returns from the Purchase Receipts or Purchase Invoices, so both stock and accounting entries get updated correctly.

1. Prerequisites

Before preparing and using a Purchase Return, ensure that you have already prepared:

• Item (the item being returned)
• Purchase Invoice (if the purchase was entered with billing)

Or, where billing has not yet been entered:

• Purchase Receipt (if receipt of goods alone was entered at the time of delivery)

Preparing these records ensures correct traceability while issuing a return.

2. How to Create a Purchase Return

A. From Purchase Receipt

1. Open the original Purchase Receipt against which the supplier supplied the items.
2. Click on Create → Return.

3. The new Purchase Receipt will open with the "Is Return" field automatically ticked.

4. The Item, Rate, and Taxes of the original Purchase Receipt will be copied, but displayed as negative values.
5. If you are returning only a portion of the shipment, adjust the amount and quantity accordingly. Include a note for return reason (e.g., "Goods defective").
6. Save and Submit.

Upon submission:

• The system reduces the item stock quantity from the Warehouse as set.
• For accurate stock valuation, the stock balance is updated based on the initial buying rate of the returned products.
• An entry in Stock Ledger is created for the decrease in stock.

B. From Purchase Invoice

If you also want the return to be reflected in accounts payable:

1. Open the original Purchase Invoice.
2. Click on Create → Return / Debit Note.
3. A Debit Note (tied to the invoice) will get created with negative values and quantities.
4. Save and Submit.

This process also ensures that the balance in the supplier's account is updated, and the return is credited in both stock and book ledgers.

2.1 Ledger Effect of Purchase Return

When Purchase Return is posted:

• In the Stock Ledger, returned items are subtracted from warehouse stock.

• In the Accounting Ledger:

  • Stock In Hand account is credited (because stock is being sent out).
• Stock Received but Not Billed account is credited (to reverse the previous receipt).

• When Perpetual Inventory is activated, ERPNext also makes journal entries against the warehouse account so that the warehouse account balance is kept in sync with the Stock Ledger.

This helps to maintain both physical inventory as well as financial books correct.

3. Effect on Stock Return through Purchase Receipt

When you are creating a Purchase Return against a Purchase Receipt:

• The Returned Quantity on the initial Purchase Receipt (and any associated Purchase Order) is marked.
• If all of the items on the receipt are returned, the status of the initial Purchase Receipt becomes "Return Issued".
• If a fraction of the items are returned, the receipt still displays the remaining stock but monitors the returned portion separately.

This prevents ERPNext from tampering with the original Purchase Receipt history while still leaving a clean record of goods received against goods returned.

4. Related Topics

• Sales Return
• Perpetual Inventory

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