Direct order returns
You can use the direct order returns feature to process direct order returns without affecting warehouse inventory, including on-hand quantity, margin, cost, and usage. You can post amounts for direct order returns and direct order cost of goods returned separately from warehouse returns in the General Ledger.
When a customer returns a direct order product to a vendor, you can create a return merchandise (RM) order in Sales Order Entry and identify it as a direct order return. You can also create a direct order return line on a stock order or copy an existing order to create direct order return. Product Adjust Non-Stock/Direct Order Entry records are created or updated, based on the direct order return lines.
When you create a direct order return, you must specify a vendor type return reason and source the product from the vendor that received the return from the customer. A tied RM purchase order, which is identified as a direct order return, is then automatically created.
You can receive the tied purchase order in Purchase Receipt of Inventory Entry. After you receive the purchase order, the direct order return is filled using the backorder fill process. The direct order return is then automatically shipped, and transactions are posted to Inventory Control GL accounts. When the direct order return is invoiced, transactions are posted to GL accounts for sales, returns, and costs of goods. The direct order return is then moved to Stage 5-Paid.
Transactions for direct order returns are recorded in Product Adjust Non-Stock/Direct Order Entry. When the purchase order is received, the quantity and amount values for the product are negative. The balance total for the product is increased by the total for the transaction. When the direct order return is invoiced, the quantity and amount values for the product are positive and the balance total is decreased. The two transactions result in a zero quantity and amount balance for the return.
You can also process the vendor invoice in Vendor Invoice Center Entry before you receive the direct purchase order. During the final update, you can select the Receive DO POs option to automatically receive the direct purchase return before it is costed, and automatically ship the direct order return. General Ledger postings and Product Adjust Non-Stock/Direct Order Entry updates are performed during the final update. Optionally, you can perform the final update using the Vendor Entry Group Update/Reconcile Invoices Report.
General Ledger accounts and postings
When you activate the direct order return feature, the Direct Order Return account becomes available to track direct order returns. Separately, you can activate the Dir Order Cost of Goods Returned account for direct orders. Use the account to enter the cost of goods returned when the return is tied to the original order.
You can specify the accounts on Product GL Distribution Setup, SA Operator Setup, and Customer Setup records. The standard GL integration hierarchy is used to determine which account is used when a return transaction is posted.
After the direct purchase order is received and the final update is performed, transactions are posted to these Inventory Control accounts to remove the inventory cost amount from the balance sheet:
| GL account | Debit | Credit |
|---|---|---|
| IC Uninvoiced | -6.50 | |
| Direct Order Inventory | -6.50 |
After the direct order return is invoiced, transactions are posted to the GL accounts to reverse the direct sales order and the associated inventory cost:
| GL account | Debit | Credit |
|---|---|---|
| Accounts Receivable | 11.83 | |
| State Tax | 0.33 | |
| Direct Order Returns | 11.50 | |
| Dir Order Cost of Goods | 6.50 | |
| Dir Order Cost of Goods Returned | 6.50 |
You can verify the General Ledger postings in GL Journal Inquiry after each transaction is processed.
Usage
Sales order lines that are identified as a direct order returns are not included in usage calculations unless one of these conditions is met:
- Usage is selected on the SA Table Code Value Setup record for the return reason that is selected for the direct order return.
- Usage is selected on the Returns page in Sales Order Entry.
Inquiry and report functions
You can use these functions to view information pertaining to direct order returns:
- Purchase Order Inquiry
On the Overview and Header tabs, ‘Return Merchandise – Direct Order’ is displayed in the Type field.
- Sales Order Inquiry
On the Overview and Header tabs, ‘Return Merchandise – Direct Order’ is displayed in the Type field. On the Line Detail tab, ‘d’ is displayed in the Direct Order Column.
- Product GL Distribution Master List Report
The Direct Order Returns, Cost of Goods Returned, and Dir Order Cost of Goods Returned accounts are listed in the Income Statement Accounts sections.
- Purchase Order Master List Report
In the Other Header Information of the Head Information section and the Line Item section in Other Line Item Information, ‘yes’ is displayed in the Direct Return field.
- Sales Order Master List Report
In the Header Information section, ‘yes’ is displayed in the Direct Order Return field. In the Extended information of the Line Item section, ‘d’ is displayed in the B/O (backorder) field. Additionally, the tied purchase order for the line item is displayed in the PO/WT/WO/VA# field.
- SA Operator Information Report
Include the Direct Order Returns, Cost of Goods Returned, and Dir Order Cost of Goods Returned accounts when you select Yes for the Print G/L Defaults? option in the report.
- Product Nonstock/Direct Order Report
After the direct order returns transactions are processed, the quantity and amount for the direct order products are zero.
- Product Trial Balance of Direct Orders Report
All values associated with the purchase order tied to the direct order return are zero including the quantity, cost, inventory value, and Direct Order Inventory account.
- Sales Entry Invoice Processing Report overview
Invoices for return merchandise orders are labeled at the header level. Direct order returns are labeled at the line level.