Pricing of Materials Returned to Vendors

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on August 24, 2021

Materials returned to vendors may be recorded at invoice price or in accordance with the method adopted for pricing out material issues. Recording of materials returned at invoice price is not realistic as the price per unit granted by vendor on return of materials cannot be the same as the original invoice cost.
Necessary adjustments for discount, freight, carriage inward etc., shall have to be made to arrive at the same. Therefore, returns should be valued according to the method adopted for pricing out material issues and entered in the ‘Issued Column’ in Stores Ledger.

Pricing of Surplus Material Returned to Store

Sometimes all the material requisitioned in a department may not be used in full and the surplus returned to stores. First alternative is to record the materials returned to stores at the price at which they were originally issued and to re-issue them at the same price on the next requisition. Second alternative is to value the return of surplus at the original issue price and to treat the same as an item of new purchase in the ‘Received column’ of Stores Ledger.

Treatment of Shortage of Materials

If any shortage of materials is noted on making a physical verification of stock of materials, it should be entered in the ‘Issued Column’ of stores ledger and valued in accordance with the method adopted for pricing out material issues.

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