How to set credit against a purchase order in Quickbooks Desktop?

It's nice to have you here, @mdipchand,

I'll be glad to give you options on how to account for a refunded items in QuickBooks.

A purchase order is a non posting transaction and it doesn't add quantity to the inventory unless billed. If the ordered items are no longer available, you may delete the PO directly or adjust the quantity there to 0.

Posting a credit to a non-posting transaction in QuickBooks is currently not an option. You may assign them to posting entries like bills to show a reduction to the amount you pay to a vendor. Here's how:

1. Go to the Vendors menu and choose Enter Bill.
2. At the top of the bill, click the Credit radio button.
   
3. Once the refund detail is complete, click Save & Close.
4. When you want to apply the credit as a payment to a bill, go to the Pay Bills menu.
5. Mark the bill you want to pay then select Set Credits.
6. On the next window, mark the credit you created from the Credits tab.
   
7. Hit Done and then Pay Selected Bills.

To explain how the credit works, see the following article: Record a vendor refund in QuickBooks Desktop

Let me know if you have any more questions about this. I'll be right here to help you. Have a good one!