[Scrap] Disposition code for sales return order in Microsoft Dynamics 365 finance and operations: Part-2

This is the Part-2 of the sales return order series where we are talking about disposition codes and its impact on inventory and financials.

If you have not visited Part-1, the click here to read.

Now in this blog we are going to talk about Disposition Action Scrap: As per this disposition action we must scrap the item and give credit to customer.

Let’s understand the scenario:

Customer US001 purchases item A0001, 1 quantity now due to some defects customer would like to return the product and want the money back.

Now when we do return for this transaction, we are supposed to have following financial entry:

On posting Credit note:

Customer Credit

Revenue Debit

Inventory Debit

COGS Credit

Now since we are using Scrap disposition code, this will post scrap entry in system:

Inventory Credit

Inventory Loss/gain (Scrap) Debit

Lets start:

Create return order

Create Item arrival

Note: This is optional , If we do not have use warehouse management process enabled at storage dimensions. We can skip and directly do registration and post packing slip