Example of Return Material Authorization Recognition for Sales Returns

This example illustrates the accounting of sales returns and the corresponding return material authorization (RMA) recognition.

Scenario

Let's assume that there's a return of the item from the previous example. Out of the two network gateway switches shipped, the customer wants to return one of them. Oracle Order Management orchestrates the return information to Oracle Receivables or Oracle Fusion Cloud Revenue Management, depending on which application is being used, and the information is interfaced to Oracle Cost Accounting through the same process that's followed for forward flows. After the revenue reversal information is available, the cost of goods sold processor creates the distribution for the RMA recognition event based on the revenue reversal information.

Analysis

Similar to the forward flow, two transactions are created for sales returns. The Return Material Authorization sales order is first created and the goods are returned through a Return Material Authorization in Receiving. Once the transaction is interfaced to costing, these distributions are created.

RMA Receipt

RMA Order #	Receipt #	Item	Unit Cost	Quantity	Deferred RMA Gain/Loss	Inventory
520951	34578	Network Gateway Switch	50.00	1	- 50.00	50.00

In this example, the entire 100% of the revenue is recognized in Receivables and the information is interfaced to costing, based on which the cost of goods sold recognition transactions are costed and accounted.

RMA Recognition

RMA Order #	Invoice #	Item	Unit Cost	Quantity	Deferred RMA Gain/Loss	RMA Gain/Loss
520951	127074	Network Gateway Switch	50.00	1	50.00	- 50.00