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Dynamics 365 Community / Forums / Small and medium business | Business Central, N... / How do you account for...
Small and medium business | Business Central, N...
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How do you account for damaged stock?

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Posted on by Kein Shah 57

Here is a demo example. We have some inventory of 100 units of X item received in the system via purchase order. It is received in the system and accounted for. Now, 1 month later, out of those 100 units, 20 are damaged and need to be scrapped. No need of any credit memo to the vendor since it was damaged by us.  In this case, what is the best way to account for these in the system to that the stock is damaged stock is not shown in inventory and costs are also not shown on purchases? Should we just create a purchase order with -20 units? or what is the best way to consider damaged good?

Thanks,

  • Suggested answer
    Azqar Profile Picture
    Azqar 52 on at
    How do you account for damaged stock?
    Create sales and purchase allowance for damaged goods in Business Central
  • Kein Shah Profile Picture
    Kein Shah 57 on at
    RE: How do you account for damaged stock?

    Thank you for your reply. I think the Item Journal options would work the best in my scenario.

  • Suggested answer
    Dallefeld Profile Picture
    Dallefeld 171 User Group Leader on at
    RE: How do you account for damaged stock?

    ZHU, the problem with a location is that you are still carrying on the balance sheet. If that's the desire, a location is great but if you want to just write off the damaged product, use of the item journal and specific general business posting group is super helpful.

  • Suggested answer
    YUN ZHU Profile Picture
    YUN ZHU 78,034 Super User 2025 Season 1 on at
    RE: How do you account for damaged stock?

    Hi, I have customers creating Damaged Locations to manage these stock.

    But if you don't need to manage these inventory in the system, you can use negative adjustment directly in item Journal or during physical inventory journal, etc.

    More details: 

    https://docs.microsoft.com/en-us/learn/modules/adjust-inventory/

    pastedimage1653353462275v2.png

    Hope this helps.

    Thanks.

    ZHU

  • Suggested answer
    Dallefeld Profile Picture
    Dallefeld 171 User Group Leader on at
    RE: How do you account for damaged stock?

    I prefer to use a Gen Bus Posting Group for SCRAP and direct that to a specific inventory adjustment expense account.  You can use a general inventory adjustment expense account.

    Then simply use an item journal, negative adjustment, the SCRAP Gen Bus Posting Group-if desired, your quantity (don't put negative quantity, you already chose negative adjustment)

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