Sales Returns Process Overview

Introduction

• Lecture focuses on the sales returns process and related accounting entries.
• Recorded while traveling, audio may contain background noise.
• Commitment to publishing 1-2 videos weekly.

Variations in Sales Returns

• Different types of returns:
  • Refunds
  • Replacements (same product or different product)
  • No return required (customer scraps the product)
• For some returns, the cost of return shipping may exceed the cost of the product.
• Today’s focus: Basic sales return against a refund.

Process Steps

1. Creation of Return Sales Order

   • Created with reference to the original sales order.
   • Includes customer code, product code, quantity, etc.

2. Inbound Delivery

   • Notification sent to the warehouse team to prepare for product return.
   • Warehouse posts a goods receipt upon receiving the products.
   • Items not immediately available for sale until quality check is completed.

3. Quality Inspection

   • Quality team checks products to confirm condition:
     • If okay: Move to normal stock for resale.
     • If damaged: Options include scrapping, returning to vendor, or returning to customer.
   • Focus for today: Products pass inspection.

4. Credit Memo Request

   • Sales team creates a request for a credit memo after passing quality inspection.
   • Request converted into credit memo.

Accounting Entries

• Goods Receipt:
  • Financial entry occurs when goods receipt is posted:
    • Debit: Inventory Account
    • Credit: Cost of Goods Sold
  • Timing of posting can vary:
    • Posting during goods receipt or after quality inspection.
• Credit Memo:
  • No financial entries during credit memo request phase.
  • Final entry when converting to credit memo:
    • Debit: Sales Account or Sales Return Account
    • Credit: Customer Accounts Receivable

Future Topics and Poll

• Discussion on variations of the returns process (e.g., returns against a replacement, sending products back to vendor).
• A poll will be created on the community page to gauge interest in explaining variations.
• Next video will demonstrate the process on SAP S4HANA using the advanced sales returns program.
• Early access to this demo for channel members.

Conclusion

• Thank you for watching and see you in the next video.