Return Inventory Item back to Supplier and Getting Paid in Cash

Hello ,
Please I Need to Know how to Return items in my inventory back to a supplier ,
I have purchased items form my supplier a month ago , and have added them to my inventory thorugh purchase invoice ,
Now , some items will be refunded to him and he will pay me cash against them.

So is there a way to deduct the Items from the inventory and adding cash to my bank account else than creating a Sales invoice ???

A Debit Note is what you need see here Use debit notes for supplier returns and refunds

Note that to get the money back into your bank account, two transactions will be required: the debit note to return the stock and create the asset of money owed to you by the supplier, and a receipt to convert what the supplier owes you into money in the bank. This is covered by the last section in the Guide @Joe91 linked to.

You can as well make cash receipt from the supplier and select the item and qty (that supposed to be returned), the inventory will be reduced accordingly.

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What is the correct way to handle a return of an inventory item back to a supplier but they charge a handling fee?

I have created a Debit note (against the original Purchase Invoice) with the items full cost amount, should I add another line, choosing a sundry expence account and enter a negative (-) amount of the handling charge to reduce the overpayment on the Purchace Invoice.

Then when I receive the refund create a receipt, select accounts payable, supplier then the purchace invoice.
Is that correct?

That sounds correct.

Thanks for the confirmation.

Yes, and that “another line, choosing a sundry expense account” can either be on the Debit Note or on the refund receipt. With the refund receipt, you will then know the exact amount of the handling fee whereas the Debit Note could be an estimate based on your calculations…

Thanks @Brucanna I have added the extra line to the Debit Note but think I may edit that and add it to the Receipt instead if it is a bit cleaner.
Thanks again.