About Reprorating Costs on Returns

When you return items to which additional costs were prorated on the receipt, you select a reproration method that determines how to reallocate additional costs attached to the returned items. More...

If you use an additional cost code, the program displays the reproration method specified in the additional cost record, but you can select another method for the detail.

You can choose to leave the cost as originally prorated, reprorate it using the original proration method, or expense it to the general ledger account you specify, as follows:

  • Select Prorate to prorate the "returned" additional cost amount over the remaining goods on the receipt, using the original proration method.
  • Select Leave if you do not want to reprorate the additional cost to the remaining goods on the receipt. The additional cost amount remains in the Inventory Control account to which you originally posted it, and is applied to all other item costs that are posted to the control account.

    • Note: The Leave option is available only if you select No Proration or Manual Proration for the detail.

    Tip: You can also use the Adjustments screen in Inventory Control to write off the additional cost to a general ledger write-off account, rather than add it to other item costs.

  • Select Expenseto debit a general ledger expense account for the returned portion of the additional cost amount. Enter the general ledger account number to which the expensed amount is posted.

Note: If you originally prorated the costs manually, you cannot choose to reprorate the costs from returned items. The amounts remain in the general ledger accounts to which they were originally posted and are part of the cost of the items that remain in your inventory. If necessary, you can post an adjustment to the Inventory Control general ledger account to remove the cost.

If you reprorate the additional costs associated with the returned items, the program recalculates the amounts for each remaining item, as shown in the following examples.

If the following items and quantities were received with prorated additional costs, and the quantities shown were returned, their additional costs would be reprorated to the remaining items, as follows:

Item Qty. Rec'd Qty. Ret'd Prorate Amt. New Qty New Ext. Cost Reproration
Calculation		 Total Repro-rated Diff.
A1-010 10 2 47.54 8 80.00 80.00 x 145.00 - 0
220.00		 52.73 5.19
A1-320 5 1 59.43 4 100.00 180.00 x 145.00 - 52.73
220.00		 65.91 6.48
A2-240 2 1 38.03 1 40.00 220.00 x 145.00 - 118.64
220.00		 26.36 -11.67
Total 17 6 145.00          

A general ledger journal entry would be created by Day End Processing for the difference in prorated amounts. Debits to the first two Inventory Control accounts equal the credit to the third account, with no net effect on Payables Clearing.

General Ledger Account Debit Credit
Inventory Control (item A1-010) 5.19  
Inventory Control (item A1-320) 6.48  
Inventory Control (item A2-240)   11.67

If you did not reprorate additional costs after returning items, the total unit cost for each item is increased proportionally with the amount originally prorated to the returned items.

Item Qty. Rec'd Qty. Ret'd Total Prorated Original
Pro-rated
/Unit (rounded)		 Calculation
(based on ret'd qty.)		 New Add'l
Cost Per Unit
A1-010 10 2 47.54

4.75

47.548

5.94
A1-320 5 1 59.43

5.94

59.434

14.86
A2-240 2 1 38.03

3.80

38.031

38.03
Total 17 6 145.00      

When you choose to reprorate costs on returns, the program apportions the amounts on the basis by which you originally prorated them (by cost, quantity, or weight).