[Zackrampage]

Hey all,

Can someone can please tell me how do you know when you have exhausted APIC and need to start debiting Retained Earnings? Does it have anything to do with how many shares were originally sold? Like if 1,000 shares were sold, and then 400 for APIC on one buy back date, and then another 400 on another day, so then next time only 200 can go into APIC and remainder in RE so as to not go over the original 1,000 shares?

Thank you!

FAR - 62 , End of aug 2015
BEC - 67, 67
AUD - TBD
REG - TBD

[Anonymous]

It's not just any APIC that you debit from in the case of a loss on treasury stock. It's only the “APIC – Treasury Stock” account, which holds the gains from selling treasury stock.

The problem would tell you if there's any beginning “APIC – Treasury Stock” balance, but I wouldn't expect there to be. The main instance you'd have to be careful for is when you are given a consecutive journal entries problem (such as a simulation). If you first sold treasury stock at a gain, then later sold some at a loss, you know you have to wipe out the APIC from treasury stock first and then retained earnings if necessary.

[Zackrampage]

Yeah will need to go over that area again. Never understood much of stockholders equity.

FAR - 62 , End of aug 2015
BEC - 67, 67
AUD - TBD
REG - TBD

[iloveaccounting220]

Yea, normally you would just debit whatever you put into APIC – Treasury from earlier transactions. The only way to have anything in the APIC-Treasury stock is if you reissue stocks at a price higher than what you bought it back for. Then you reissue a few more at a loss, then you would have to debit the balance that you had in there before from the gain earlier and then take everything else as a debit to retained earnings.

BEC - 76 (1/24/15)
REG - 82 (4/13/15)
AUD - 89 (5/31/15)
FAR - 78 (8/16/15)

Starting right now I'll be strong
I'll play my fight song
And I don't really care if nobody else believes
'Cause I've still got a lot of fight left in me

[makiu]

@Zackrampage

the best way to keep track for APIC- Treasury Stock is using a T account and journal entries. Can not go wrong.

500 shares@40

T-STOCK – 20,000

>>>CASH 20,000

SOLD 100 shares @45

CASH–4500

T-STOCK>>>>>>>>4,000

APIC-T-STOCK >>>>500

and from this point forward just reconcile the T account like a checking account. If you run out of money ( T-STOCK APIC), then DR Retained Earnings

practice, practice and more practice. Good luck studying!!

[Author]

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