When a product is returned by customer as defective and vendor is not willing to replace or reimburse, we have to record this as part of write-off. We do issue a Credit Note to the customer for the defective item by unchecking the return box so that the system won't add back the qty. of this returned item but how about the cost for the write-off? Is there an extra step we need to do?

Hi Kitty

No extra step. If you think through the GL entries, it will make sense. You will have no sales, and yet the cost will show up in cost of sales and the inventory balance sheet account will be reduced.

If you feel strongly about the cost not showing up in cost of sales, you can make a journal entry to move it to an inventory write off account.

Steve