Credit notes and profit balance

when make credit notes for sold items ( as sold returns ) and resell it again.
at the ( Inventory Profit Margin report ) all value its come doubled!

any solutions?

Are you saying, for example, that if the item sells for 10, and you sell it, receive it back on a credit note, and sell it again, the report shows sales of 20?

If so, that is correct. The Inventory Profit Margin report gives you the profit made on sales. In your example, you have sold the item twice. The credit note was merely a way of obtaining an item to sell, just as though you had purchased more from a supplier. (In effect, you purchase it from the original customer.)

Meanwhile, you might have purchased more of the item at different costs, changing the average cost. Or, you might sell the item the second time at a higher or lower price, changing the margin on that particular sale. So, in this case, let’s say you buy at 5 and sell at 10 for a margin of 5. After the credit note, you sell the second time at 12, for a margin of 7. Your overall margin on two sales of the item will be 6.

@Tut thank you dear for your time. I got your point but unfortunately this way its not show the actual real profit of sold item
I attached the photo show the result, if its correct then its show all sold items with there profit regardless the returned items

otherwise. if we want to see the real profit regardless the credit note shall we delete the sold invoice of the items 1? what the perfect way to avoid returned items to show at the profit margin report ?

No, you definitely should not. That was a real sale at whatever margin applied, based on the sale price minus the cost of goods sold (which was the average cost at that moment.) If you delete it and leave the credit note, that will distort your Profit and Loss Statement.

That is correct. As I said in my first reply, the report gives you margins on sales, not net profit for the business or even that inventory item.

You cannot do this with any built-in report. You would need to construct a custom report. Explained another way, the purpose of the report is not to show net profit on a particular inventory item. Its purpose is to report the margins on all sales that are made. It does not consider how the items are acquired: by purchase invoice, direct payment, gift, return by credit note, inventory adjustment with a journal entry, or any other method. It only considers the sale prices and average costs of goods at the moment sold.

So what use is the report, you may wonder? Suppose your sales personnel have authority to negotiate individual sale prices on each sales invoice. The report will tell you whether, together, they are achieving your desired target margins. It will not tell you anything about how frequently customers decide they don’t like your product and return it. It will not tell you how often the product breaks during shipment and must be adjusted in price. It will not tell you anything about margin on products sold as part of inventory kits, because kits are not included in the report.

For businesses that sell a few very expensive items that are often returned, the report has very limited application. For businesses that sell many of an item and infrequently need to make any adjustments, it comes very close to a net profit report by inventory item. Like any report, you need to understand what it is designed to do.