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[Scrap and Replace] Disposition code for sales return order in Microsoft Dynamics 365 finance and operations: Part-3

This is the Part-3 of this Disposition code for sales return order. You can view Part-1 and Part-2 Here.

Now in this part I am going to talk about next disposition action which is Scrap and Replace, This disposition code allows us to give replacement to the customer against the return order. We can replace with same item or any alternate item.

Let’s understand this by scenario:

Customer US001 purchased product A0001 item from USMF , item is damaged and can not be reused or repair but customer would like to have other quantity of this product. SO in this case we have to following:

  • Return order.
  • Scrap inventory against return order.
  • Replacement order to customer

Impact expected on Return order:

Financial :

         Customer Credit

Impact expected on Return order:      

Credit note

Customer Credit

                        Revenue Debit


Inventory loss/gain (Scrap) Debit

            Inventory credit

Impact due to replacement order (Sales order)

Customer balance = NO impact (Zero due to free replacement)


 Inventory Credit

            COGS Debit

Create return order.

Arrival overview

View inventory impact at this stage

Create Replacement order

Post packing slip

Add details for replacement order and post packing slip

View replacement order

View inventory impact at this stage

Process replacement order and view inventory impact

Post credit note against return order

View final inventory impact and financial vouchers as expected

View Customer subledger

That’s it for this blog. Hope this will help you .

Thank you !!! Keep reading and sharing !!

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