I assume the unit you transferred to RMA was the defective one. That’s a reasonable and creative way to temporarily segregate defective stock, since you planned on replacing it with good stock. But you ignored the cost accounting. You got the DOA widget back and sent out a good one, making your quantity on hand correct. That, of course, left you with one defective unit in your inventory, which you isolated at the RMA location.
Since the manufacturer is replacing the defective widget at no cost, you could have simply substituted the replacement unit at RMA and transferred it back to regular inventory. Now quantities and average costs at all locations would be correct.
The problem with what you did is that the defective unit had a cost associated with it in Inventory on hand. When you wrote it off, you converted that cost to an expense in RMA expenses that never really happened. Because the manufacturer replaced the widget at no extra cost to you, the new widget actually assumed the defective widget’s cost in Inventory on hand, and you have no expense.
The write-off removed one unit and its cost from inventory. The purchase invoice added the unit back, but since you made the cost zero, there is now no cost associated with that unit. This artificially lowers the average cost of all widgets in Inventory on hand. In other words, your quantity is correct, but average cost is too low. The cost of that last widget was not really zero. Its cost is whatever you paid for the original, DOA widget. You just went through some product switching before all widgets in inventory were working correctly.
Replacement of the defective unit while in stock at the RMA location (without any transaction) is probably the easiest solution, as long as things happen quickly. But what if it takes 3 months for the replacement to arrive and a widget is quite expensive? Then you might want to enter intermediate transactions so your position is more precisely represented during the waiting period.
In that case, issue a credit note for the DOA widget. That action brings its cost and quantity back into inventory. Issue a sales invoice for the replacement widget, which will be at zero balance due, because the credit note will cancel out the total. Now the customer is whole and your inventory quantity and cost are correct. Transfer the DOA widget to RMA. Substitute the new widget there, or have your supplier issue you a credit note (entered as a debit note) and a new sales invoice (entered as a purchase invoice). This end of the transaction will be exactly like the portion you executed with your customer, but in reverse. The net result will be the same as the direct product swap at the RMA location, but everything will be more accurate if there are delivery delays, etc.
As a wrap-up, remember that inventory write-offs are meant for situations where you have real costs of inventory items and can no longer obtain revenue from those items. Situations where you use write-offs include theft (if not covered by insurance), loss, spoilage, or conversion to internal use.