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.

• Cancellation of a Shipped OrderCancellation of a Shipped Order
• Returning Damaged Goods
• Impact of Returning Goods
• Reverse COGS Entry
• Product Exchanges

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:

• It increases the Quantity On Hand by the number of units listed in the cancellation line item.
• It decreases the Quantity Shipped by the same amount.
• It increases the Quantity Available by the same amount.

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.

When a cancellation order is processed, the service representative selects the Not Returned to Stock option on the Order Line record if the products returned are not to be added back to the inventory.

When the cancellation order is shipped, the number of units returned is deducted from the Quantity Shipped field (just like a regular return of products). However, if the Not Return To Stock option is selected on the Products record, the Quantity On Hand and Quantity Available are not increased.

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.

Reverse COGS Entry

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

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 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 GL entry.)

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.

A product exchange begins with the creation of a cancellation order. The cancellation order has two order lines: one containing a negative quantity for the returned product and another containing a positive quantity for the exchange product. When the cancellation/exchange order is saved and shipped, inventory is tracked for each order line. Negative order lines (product returns) return the shipped or reserved units to Quantity On Hand and Quantity Available (when the cancellation order ships). Positive order lines (exchange products) move inventory to Quantity Reserved or Quantity Shipped depending on the order's status (Taken or Shipped).