Price corrections, wrongly made invoices – all this and even more can happen with suppliers and as such, it also happens that they are submitting credit invoices to adjust the original ones. All is fine and good since you’re having to pay less, but how about the accounting, what should be done there? Essentially same as you’d do with your own sale invoices, you need to credit purchases now. For regular services and for goods you’ve already sold it’s fairly easy in fact. In such cases your accounting entry should be as follows:

Db: Payables to suppliers
Cr: Expense account the initial expense was charged to

In such rare occasions where the goods haven’t been sold yet however (provided the credits are done for goods purchases), it’s not the expense you should adjust, but the inventory. Entries that you should be making:

Db: Payables to suppliers
Cr: Inventory

All in all, it’s pretty obvious what you should do – decrease the payables and as such also the counter financial statement line – either expenses or inventory. You need to decrease the line item the payable was made for or where the item the payable was made for has been recognized – either of the two.