When in circulation, you can mark any book as lost.
1. Click 
-> Circulation -> Circulation.
2. Load up the patron that has lost the item.
3. Find the record you wish to mark as lost and click on the 
to expand the record (if it is not already expanded).
4. Click 
.
You will receive a popup to confirm the change.
The item will then be returned off the patron and a note will be left on the copy to let admin staff know that the item was lost on x day by x patron.
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