Accounting for returned materials
To note a return on an purchase:
1. First, follow the steps here to edit your purchase entry: How do I edit a purchase order?
2. Remove the old line item from the purchase.
3. Add the new purchase item (if any).
Suppose there are additional shipping costs associated with the return. In that case, these can potentially be added to the total shipping on the purchase order so it is proportioned to all items and is included in your COGS.