Every now and then it happens that your suppliers make mistakes. They send out wrong invoices for completely wrong goods, right goods but wrong prices etc. Be the reasons what they are, you need to account for the invoice regardless.

Unless your supplier sends the credit invoice right away, at first you’re stuck with the wrong invoice and if you want to start selling the goods or using them at least, you need to account for them. 

So, let’s say your initial entry was something like this:

Db Inventory 150

Cr Account payables 150

Now your supplier sees the mistake and sends you a new invoice for only 120, which is the correct amount. Essentially you’ve got two options, take back the initial invoice or reduce the initial entry amounts.

Options number 1 – best used for when you haven’t used the goods just yet:

Taking back the initial invoice:

Db Account payables 150

Cr Inventory 150

Accounting for the new invoice:

Db Inventory 120

Cr Account payables 120

Option number 2 – for when you’ve already used the goods so you could just reverse some of the expense instead (effectively you should have expensed those goods with the correct price in the first place even though the supplier made a mistake):

Db Account payables 30 (that is 150 less 120)

Cr Inventory 30

And of course if you can hold on and wait, it’s always best to just wait for the right invoice and account for the goods then. It is always good to do things once and properly.