General Ledger Journal Entries Generated from Returns
Returns of items to vendors are assigned source code
In Inventory Control, returns debit the item's payables clearing account and credit the item's inventory control/expense account with the value of the returned items, prorated additional costs, and allocated taxes. When additional costs prorated to returned items are reprorated, additional entries are created to debit or credit the Inventory Control and Payables Clearing accounts for the remaining items on the receipt.
When a credit note is posted for the return and you have run Day End processing, a credit note is created in the Accounts Payable batch. When the credit note is posted in Accounts Payable, the transaction will debit the vendor's payables control account and credit the vendor's payables clearing account with the value of the returned items, prorated additional costs, and allocated taxes.
Non-inventory items. When non-inventory items are returned, Day End Processing does not create any journal entries for Inventory Control accounts. The transaction is sent to Accounts Payable as an invoice or credit note which will debit or credit the G/L expense account specified for the item and post the corresponding credit or debit to the vendor's payables control account.