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Purchase returns

Businesses sometimes return goods to their suppliers for various reasons. For example, items may arrive damaged or may not meet the required specification. This topic covers where and how a purchase return is recorded in your MYOB software.

If you are completing our software practice set, the steps to record a purchase return transaction involve entering a negative purchase invoice (bill) and applying the supplier debit (decrease in the balance due to be paid to the supplier) to the original purchase invoice (bill).

Entering purchase returns into your MYOB software involves two steps. First, a debit note is created by creating an invoice (bill) with a negative amount in the Bill column. Next, the debit note is applied to an existing purchase invoice (bill). For this example we will create and then apply a debit note to the following open purchase invoice (bill) for the credit purchase from Mountain Spring.

Image of purchase invoice before applying the debit note

Creating the supplier debit note

To create the supplier debit note, start by opening the Purchases Command Centre and selecting Enter Purchases.

This displays the Purchases - New Item window. In the top left hand corner of this window there is a field from which you can choose QUOTE, ORDER, RECEIVE ITEMS or BILL. If BILL is not already displayed in this field, click the arrow next to this field and change the field to BILL.

Helpful Hint!

If you are completing our software practice set and the title of the window is not Purchases - New Item, it is because your MYOB software is displaying a different layout for that window. To change this to the Purchases - New Item window, click the Layout icon at the bottom of the window. In the Select Layout window that appears, select Item and click the OK button. The title of the window should automatically change to Purchases - New Item.

You should now notice that the colour of the window has turned blue, the colour your MYOB software uses in the Purchases - New Item window to indicate that you are recording a purchase invoice (bill). Remember, you enter the details of the purchase return into your MYOB software as a negative amount in the Bill column in the Purchases - New Item window. The following screenshots and reference table show step-by-step instructions on how to enter a purchase return into the Purchases - New Item window. Note that each step is assigned a reference number to help you identify the appropriate field or icon in the screenshots.

The Purchases - New Item window with reference numbers

Step	MYOB software field or icon	Action
	Supplier	Click the search icon to open the Select from List window where you can select the supplier to which the purchase return relates to. Click the Use Supplier button to select the supplier. Notice that when you select the supplier, your MYOB software automatically populates certain fields with information about the supplier that you entered when you added the supplier into your MYOB software during the setup process. You can accept that information or manually change it for this purchase return.
	Terms	This field is automatically populated when you select the supplier. You can accept this information or change it for this purchase return by clicking on the zoom arrow.
	Ship to	This field is automatically populated with the name and address of your business that you entered when you set up your company file.
	Purchase #	Accept the purchase number your MYOB software automatically assigns to this bill or enter the purchase number you wish to use.
	Date	Enter the date of the purchase return.
	Supplier Inv#	Enter the supplier's invoice number in the Supplier Inv# field if known.
	Bill, Received	Enter the number of inventory items returned to the supplier as a negative number in the Bill column. Notice that when you click out of the Bill column, your MYOB software automatically populates the Received column with the number of items entered into the Bill column.
	Item Number	Enter the item number of the item of inventory returned to the supplier. If you do not already know the item number, click into this cell to select the cell. You should notice that a box appears around the cell. You should then press <tab> on your keyboard to display the Select from List window where you can scroll through the list of inventory items. Click on the appropriate item of inventory to select it, then click the Use Item button.
	Description	When you select the item of inventory using the Item Number field, your MYOB software automatically populates this field with the longer description of the item of inventory. Read this description to check that you have selected the correct item. Then press <tab> on your keyboard to move to the next field.
	Price, Total, Tax	Your MYOB software automatically populates the price field with the last price paid for that item of inventory. Notice that the Total of the invoice is a negative number. The Tax field is also automatically populated with the tax code specified when that item of inventory was set up.
	Record button	Once you have reviewed the information entered for the purchase return, remember to click the Record button to record the purchase return.

Applying the debit note to an outstanding invoice

Now that you have created the supplier debit note by creating a negative invoice (bill), the next step is to apply the debit note to an outstanding purchase invoice.

Helpful hint!

Note that debit notes can only be applied to an open purchase order or bill (purchase invoice). An open purchase order is a purchase order that has not yet been converted to a purchase invoice. An open bill is a purchase invoice that has not been paid in full to the supplier. Once the invoice has been paid to the supplier, it is then considered to be a closed bill.

In the Purchases Command Centre, select Purchases Register.

This opens the Purchases Register window. The following screenshots and reference table show step-by-step instructions on how to apply the debit note to an outstanding invoice (open bill). Note that each step is assigned a reference number to help you identify the appropriate field or icon in the screenshots.

Purchases register window - Returns & debits tab

Step	MYOB software field or icon	Action
Purchases Register window
	Returns & Debits tab	Click the Returns & Debits tab to be able to view the debit notes.
	Search by	Select All Suppliers if you wish to display the debit notes for all suppliers. Select Supplier to view all debit notes for one specific supplier. Note that if you choose Supplier, an additional drop down field will automatically be displayed. Click the search icon in this new field to display the Select from List window where you can select the specific supplier whose debit notes you wish to view. Click the Use Supplier button in the Select from List window to select that supplier.
	PO#	Locate the PO# of the debit note you wish to apply to an open invoice (bill) and click on that row to select it. The debit note should be highlighted in blue.
	Apply to Purchase	Click the Apply to Purchase button to open the Settle Returns & Debits window where you can apply the selected debit note to an open bill (open purchase invoice) for that supplier.
Settle Returns & Debits window
	Various	Notice that your MYOB software automatically displays the supplier, debit amount and a description (Memo) of the transaction. In the example given, the Memo also includes the P0# number of the debit note, which is 00000015.
	ID #	Accept the identification number your MYOB software automatically assigns to this purchase return or enter the identification number you wish to use.
	Date	Enter the date you wish to use to apply the debit note to the open invoice (bill).
	Amount Applied	Find the invoice (bill) you wish to apply the debit note to and click in the cell in the Amount Applied column for that invoice. Notice that your MYOB software then automatically populates this cell with the debit amount.
	Out of Balance	This cell reports the difference between the amount in the Debit Amount field and the total of the Amount Applied column. Check that the out of balance amount is $0.00 otherwise you will not be able to record the transaction. If you have just entered an amount in the Amount Applied column you may need to click out of this cell before your MYOB software recognises the amount you have entered into that field and automatically updates the Out of Balance field.
	Record	Check that the details are correct and click the Record button to record the purchase return.

And just to double check...

If you want to check that the debit note has been applied to the invoice (bill), open the related invoice in your MYOB software. For instructions on how to find transactions in your MYOB software, including how to open an invoice, see the Find transactions page in this learning centre.

In the following screenshot notice that the amount of the debit note appears in the Applied to Date line near the bottom of the window. The amount reported as Balance Due has been updated to reflect that the amount of the debit note has been subtracted from the Total Amount reported on the invoice.

The Purchases - Edit Item window with the debit note applied to it

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