Question

How do i calculate Paid in capital common and retained earnings when stock is sold below value.

I know when i journal its

a debit to cash   a debit to paid in capital treasury stock, a debit to retained earnings and a credit to treasury stock common. I just can't fiure out how to calculate how much goes to retained earings and how much goes to paid in capital treasury stock. please help.

Answer 1

	lets take an example
	Treasury stock purchased 1000 shares at $20
	sold 400 shares at $25
	sold 600 shares at $15
	Accounting titles & Explanations					Debit	Credit
	Treasury stock					20,000
	cash	(1000*20)					20,000
	Cash	(400*25)				10000
	Treasury stocj		(400*20)				8,000
	Pain in capital in excess from Treasury stock						2,000
	Cash	(600*15)				9000
	Paid in capital in exces from Treasury stock					2,000
	retained earnings					1,000
	Treasury stock		(600*20)				12,000
	Thus we see in last entry the retained earnings is debited for the balance amount
	that is 12,000-9000-2000 = 1,000
	so in case paid in capital in excess from treasury stock is sufficient than we don't
	need retained earnings , but if there is some left even after debiting paid in capital in excess from Treasury stock then we need to debit the retained
	earnings with the amount that would balance the accounts