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How do you account for damaged stock?

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Posted on by Kein Shah

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?

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Dallefeld 211 User Group Leader on at

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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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YUN ZHU 95,548 Super User 2025 Season 2 on at

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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/

Hope this helps.

Thanks.

ZHU

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Dallefeld 211 User Group Leader on at

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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.

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Kein Shah 57 on at

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

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Azqar 52 on at

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Create sales and purchase allowance for damaged goods in Business Central

https://youtu.be/xY4o-72b6NU?si=C6FfaKZHjv7T0A2m

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