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Part of the cancellation order process is the processing of product returns and product exchanges. The effects on inventory depend on whether the cancellation order is returning all the products ordered, some of the products ordered, damaged products or returning products in exchange for different products. No matter which type of return, the original order must have been shipped in order to create the cancellation order.

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Cancellation of a Shipped Order
Cancellation of a Shipped Order
Cancellation of a Shipped Order

If a cancellation order is created after the original order is shipped, the net effect on inventory usually is an increase in Quantity on Hand and a decrease in Quantity Shipped (once the cancellation order is shipped). For a cancellation order that has a single line item on the order with a negative quantity, the effect on inventory is threefold:

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Order Shipped

Order Cancelled

Quantity On Hand

490

500

Quantity Available

490

500

Quantity Reserved

0

0

Quantity Shipped

10

0

 

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Returning Damaged Goods
Returning Damaged Goods
Returning Damaged Goods

Sometimes cancellation orders return products that are damaged and cannot be returned to stock for re-sale. To track the units that are not returning to inventory the order line in the cancellation order needs to indicate that the returned products are not to be added back to the Quantity On Hand and Quantity Available.

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Order Shipped

Order Cancelled(Returning Damaged Goods)

Quantity On Hand

75

75

Quantity Available

75

75

Quantity Reserved

0

0

Quantity Shipped

25

0

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Impact of Returning Goods to Vendors
Impact of Returning Goods to Vendors
Impact of Returning Goods to Vendors

When units are returned to the vendor, a user runs the Inventory Return wizard to automatically generate adjustment product inventory ledger entries to deduct those units from available inventory. See Returning Goods to Vendors for details.

This operation has the following impact on a product's quantity:

  • It decreases the Quantity On Hand by the number of units returned.
  • It decreases the Quantity Available by the same amount.

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Reverse COGS Entry
Reverse COGS Entry
Reverse COGS Entry

When taking an order for a product that requires calculation of Cost of Goods Sold (COGS), the Aptify system generates a GL entry similar to the one below:

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For the purpose of processing a cancellation, the reverse entry occurs and appears on the cancellation order's Accounting > GL Entries tab.
However, note that the entry for reversing Cost Of Goods Sold COGS only occurs when the inventory is not damaged and is returned to stock. (In other words, if you select the Not Returned to Stock option for a cancellation order line, Aptify will not generate the reverse COGS general ledger (GL) entry.)

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Product Exchanges
Product Exchanges
Product Exchanges

Often cancellation orders return product in exchange for another product. How inventory is affected when products are exchanged is a combination of the effect of returned products on cancellation orders and purchased products on regular orders.

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