Purchase Invoice and Debit Memo wash, but they generate a loss on the income statement


A Purchase Invoice and Debit Memo both for the same amount are applied to each other leaving a 0 balance on both. But the income statement is showing a loss in returns.


Root cause

Everest is using a Weighted Average as part of the Inventory Valuation. The cost used in the inventory discharge will be the average cost at the time of the document creation. If the journal for the Debit Memo has an increased value of the Inventory Control account, it will offset the Loss on Return account.


In case you would like to clear the Loss on Return, you can create a General Journal entry offsetting the inventory account:

  1. Navigate to Accounting > General Journal.
  2. Choose Inventory Adjustment in the Journal Group dropdown:
  3. Please review the associated Credit Memo to see which account is being used to offset the Inventory account.
  4. Once you fill in all the required info, click Save.



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