daleoempire
Level 3

This makes sense, and you can even throw in common stock to that journal entry if the entity actually has common stock and want's to issue new stock.

 

My question however is what reduces APIC then? Shareholder distributions reduce retained earnings, so what then reduces APIC for S-corporations? I can understand that if the corporation buys back the shares at a higher price. But that doesn't seem practical for an S-corp that's really an LLC or partnership that made the S-corp election? So that does mean APIC stays on the books indefinitely?

0 Cheers