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Purchase returns for Purchase receipts with item charges

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Posted on by TH-21050357-0

We have a scenario where we have purchase receipts that have been allocated with item charges (from a separate invoice and vendor) and we want to to do purchase return orders for partial quantity. The purchase receipts haven't been invoiced yet.

So, firstly, is it possible to do purchase returns only without purchase credit memos and will the item charges be reverted back? Second, if we do both purchase returns and purchae credit memos, will the item chargse be reverted back for those returned, i.e., Credit Inventory Account and Debit Payable Account for freight expense vendor?

For example, if we have received 100 units and we have allocated freight charges of 100 USD to those 100 units, how will it work if we return 10 units? What can we do if we want to reduce the Payable account of Freight expense vendor for those 10 units?

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Dynamics 365 Business Central

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Gerardo Rentería Ga... 19,674 Most Valuable Professional on at

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Purchase returns for Purchase receipts with item charges

Hi, good day
I hope this can help you, and give you some hints.

1.4.39 Customers/ POSTING CREDIT MEMO USING ITEM CHARGES - Dynamics Business Central NAV

Process returns or cancellations - Business Central | Microsoft Learn

Best Regards
Gerardo
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Khushbu Rajvi. 17,377 Super User 2025 Season 1 on at

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Purchase returns for Purchase receipts with item charges

If this helps:https://learn.microsoft.com/en-us/dynamics365/business-central/payables-how-assign-item-charges
Sohail Ahmed 3,285 on at

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Purchase returns for Purchase receipts with item charges

Maybe this will help clarify your scenario.

1. Can you do a Purchase Return without a Purchase Credit Memo?

Yes — you can create a Purchase Return Order for the received quantity even if it hasn’t been invoiced yet. But it won’t reverse the item charges unless the related charge invoice has also been handled correctly.

2. Will item charges be reversed when doing returns + credit memo?

Partially. When you return items, the cost (including allocated item charges) is reversed from inventory. But the payable to the freight vendor is not automatically reduced, because that charge is linked to a separate invoice.

Example – 100 units with $100 freight:

You return 10 units.

Inventory is reduced with charge-adjusted cost.

But the freight vendor still shows $100 payable — BC does not auto-adjust that payable.

What to do:

To reduce the payable to the freight vendor, you’ll need to:

Create a Purchase Credit Memo against the freight vendor.

Manually allocate the value proportionally (e.g., $10 for 10 units) using item charge assignment on the credit memo.

This ensures both inventory and freight payables are accurately reversed.

Mark below checkbox to make this answer Verified if it helps you. Let me know if you’d like a step-by-step example.
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Mansi Soni 3,391 on at

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Purchase returns for Purchase receipts with item charges

Hello,

Below are the responses to your queries, provided individually for clarity

1. Can you do Purchase Returns without Credit Memos?

Yes, Purchase Return Orders in Business Central can be created and processed without creating a purchase credit memo initially, but eventually, a credit memo is posted from the return order to finalize financials (i.e., inventory and vendor liability reversal). So while the return order is the operational step, the credit memo is essential for financial impact.

2. Will Item Charges Be Reverted Automatically?

No, item charges do not automatically reverse when a return is processed — neither from the Purchase Return Order nor the Purchase Credit Memo. Business Central does not automatically reallocate or credit the portion of the item charge (e.g., freight) associated with the returned quantity. You would have to manually reverse or reallocate the item charge if you want to reduce the Payable account of the freight vendor.

How you can handle it properly:

If you want to reduce the freight vendor’s Payable account by $10 worth of the original $100 freight (proportionate to the 10% return), you must:
1. Manually create a Purchase Credit Memo for the freight vendor, for $10.
2. Use the same Item Charge (freight) line in the credit memo, and reallocate the $10 across the returned 10 items (or a dummy item if returned items no longer exist).
3. This ensures proper reversal of freight charge and corrects the Payables and Expense/Inventory accounts.

Hope this will help you to resolve your queries!

Regards,
Mansi Soni
TH-21050357-0 26 on at

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Purchase returns for Purchase receipts with item charges

Actually my question was - how will the item charges be reversed back when we do purchase returns if it's from another vendor? From my testing at the moment, after posting purchase returns and credit memo, it only debits Purchase Account and credits Inventory account but not affecting the vendor account of the Item Charge. Are we missing some steps?

The following is a screenshot of the ledger entries after posting purchase return orders.
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KP - Solution Archi... 528 on at

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Purchase returns for Purchase receipts with item charges

Hi

You cannot create credit memos against a receipt

It can be created against an invoice only, where you can partially reverse the quantity.

Thanks,

Kp