Inventory levels are wrong after processing a refund from a supplier

Legacy KB ID: 3770

Question

I received a refund from a supplier for overcharging on a recent purchase.  Why is my inventory level now wrong after making the adjustment in Reckon Accounts? 

Answer

You may encounter this issue if you process a credit note for the refund.  As you are adjusting the value of the purchase and not the quantity, when you leave the quantity field blank, Reckon Accounts will assign a quantity of one.  Your inventory level is now showing one less than you actually have. 

 

Solution

Below is the correct method to process a refund from a Supplier where only the value of the purchase is adjusted.  This method will ensure your inventory levels report correctly and show the correct Avg Cost.

 

1.    View the details for your inventory item, noting the On Hand and the Avg. Cost.  Calculate the total value:  On Hand times Avg Cost. 

 

2.    If refund is received in Cash:

a.    Company Menu > Make General Journal Entry

b.    Debit Undeposited Funds (or Bank) for full amount

c.    Credit Other Income:Refund from Suppliers for Net amount and add original Tax Code – Total should equal the full amount.

d.    Add a note to Memo column

e.    Save & Close

3.    If refund is received as a Credit

(You must enter the credit as a General Journal to avoid incorrect adjustments to your Inventory Asset account)

a.    Company Menu > Make a General Journal Entry

b.    Debit Accounts Payable for full amount and select the Supplier in the Names column;

c.    Credit Other Income:Refund from Suppliers for Net amount and add original Tax Code – Total should equal the full amount.

d.    Add a note to Memo column

e.    Save & Close

 4.    Add a note to the supplier record

a.    Supplier Centre > click on the Supplier

b.    Click on the Edit Notes button

c.    Enter a note for the refund

5.    Make an Inventory Adjustment to adjust the value of your inventory account for the net value of the refund:

a.     Click on Suppliers > Inventory Activities and select Adjust Quantity/Value on Hand;

b.    In the Adjustment Account select a cost of Goods Sold account like Refund from Suppliers 2;

c.     Tick the box Value Adjustment in the bottom left corner;

d.    In the New Value column the total value you calculated above will appear.  Reduce it by the Net amount of the refund; 

e.    Click Save & Close to complete the transaction. 

Your Inventory Item Avg. Cost will now reflect the refund and all other accounts will be properly adjusted for tax.

Need more help?

Ask the Reckon Community at: https://community.reckon.com/ 

How did we do?

Inventory on Hand on Item List does not match Adjust Quantity/Value on Hand form

Percentage discount item cause a problem if the form is set to include tax.

Related Articles

Processing a Refund from a Supplier in Reckon Accounts Business
Handling a refund from a supplier?
How to handle a Refund from a Supplier.
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