When a company sells treasury stock below its cost, it usually debits the excess of cost over selling price to Retained Earnings. Paid-in Capital from Treasury Stock. Paid-in Capital in Excess of Par Value. Loss on Sale of Treasury Stock. The treasury shares account is maintained at the original purchase price ($5 per share), so any premium over $3 that it was sold for below cost in the example above is accounted for in T.S. as originally purchased, and written down to contributed capital and then R.E. if sold below that $5 price, and increasing contributed capital (not RE) if sold above that price. If the corporation were to sell some of its treasury stock, Instead the $270 goes directly to stockholders' equity in the paid-in capital section as shown below. If the corporation sells any of its treasury stock for less than its cost, the cash received is debited to Cash, the cost of the shares sold is credited to Treasury Stock, and the difference ("loss") is debited to Paid-in Capital