Purchase returns
In one sentenceGoods a business returns to the supplier because of a defect or an ordering error, reducing inventory, the supplier balance and the related input VAT.
Simply put
When you return goods to the supplier, you reverse part of the purchase invoice: inventory falls, what you owe the supplier falls, and the input VAT you will deduct falls.
The supplier usually issues a credit note for the value of the return, so keep it, as it is the document supporting the VAT reduction.
Worked example
An establishment bought 100 cartons at 50 SAR before VAT, then returned 10 damaged cartons. VAT is 15%.
Value of the return before VAT10 × 50 = 500 SAR
VAT on the return500 × 15% = 75 SAR
Dr. Supplier575
Cr. Inventory500
Cr. Input VAT75
Reduction in the supplier balance = 500 + 75575 SAR
Don't confuse it with
Credit noteThe return is the transaction itself, and the credit note is the document the supplier issues to evidence it.
in FullScreen ERP
Purchase returns in the system send goods back to the supplier with their effect on inventory and VAT. Purchasing and suppliers