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Inventory - To be returned


I have a question regarding the inventory that we actually don't need and is sitting in our warehouse to be picked up by the supplier. The fact is the supplier hasn't picked up since past few months and it is showing up in our book as if we owe them cash. What is the best way to account the accounts payable (or reverse AP) because technically it's not a liability to us.



Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

First...Technically it IS your liability. The asset is still with you. You may or may not have ORDERED it and the supplier included it in an invoice.
Second...It should be (or have been) recorded in your books as Inventory/Accounts Payable.
Third...A simple reversal entry as Credit to Inventory and a Debit to A/P. How you do it depends on what system you have in place.
Fourth....TIMING. You just don't reverse it (i.e., the inventory is still in your warehouse). You can't UNILATERALLY just erase the inventory/payable. Management needs to decide (or negotiate with the supplier) on what to do with the inventory.

(Director of Finance) |

Location of the inventory is not the deciding factor.
Who owns (has title) to the inventory? If the vendor ha issued credits to you for it and it is simply located in your building, then it should be off of your books. If they haven't issued credits, then you own it. Another way to look at it is if you wanted to , could you sell it to anybody else?
To get it off your books, you either need to sell it, return it (with the vendor issuing you credits), or write it off.

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Yep- if vendor agreed to take it back, there must be a document/email trail for it. And if there is, put them on notice that the inventory is at their risk in your warehouse so they should come pick it up quickly.
Have you looked at simply shipping back to them (I realize you may have to pay the return freight)?
is it material?


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