When the goods arrive back from your customer, receive them against the return. This is the step that decides what goes back into sellable stock.
Before you start
The return must be Confirmed.
Receive the goods
In the top menu, click Sales, then View Sales Return.
Click the return number.
Click the Receiving tab.
Click New receipt.
Enter the quantity that came back, and the bin you are putting it in.
Check the Restock setting on every line — see below.
Click Receive.
Check Restock before you click Receive
Each line has its own Restock setting, and it decides whether that line's goods go back into stock.
It defaults to on. So a return you click straight through puts everything back on the shelf as sellable — including anything that came back broken.
Turn Restock off for anything you would not send to the next customer. The return is still recorded and the customer is still credited; the goods just do not rejoin your sellable stock.
Partial returns
You do not have to receive it all at once. Enter what has arrived, and the return stays open for the rest — the same as a purchase order.
How to know it worked
The Receiving tab shows a receipt and the line quantities update.
For lines with Restock on, the item's On Hand goes up by that quantity. For lines with Restock off, the received quantity still advances but stock does not move — which is what you wanted.
What this does to your costs
Returned stock comes back at your current average cost, so your item cost does not move. See What is average cost (MAC) and how is it calculated?.