Returns

I am curious about the best way to handle this situation.  We are using 2 way match. 

1.  A PO is issued for 50 widgets.

2.  50 widgets are received

3.  50 widgets are invoiced, matched and paid.

4.  A credit memo arrives in AP showing that 25 widgets were returned.

I am assuming that purchasing should go into the returns screen and show the 25 returned.  Should the credit memo then be matched to the PO?  Thanks for any insight into how you handle these situations.  Our group is relatively new to purchasing and still learning.