Multiply the number of shares by the price per share to determine the amount of money you will have to pay out. If you were buying back 10,000 shares with a par value of $1 originally sold for $12 each at $15 per stock, you would pay out $150,000., You will need to list the common stock as a debit for the par value, so 10,000 shares with a par value of $1 would be listed as "common stock, par value $1" with a debit amount of $10,000. Notate the original sale price minus the par value as additional paid-in capital.Since the 10,000 shares in the example were originally sold at $12 per share, the additional paid-in capital debit amount would be $110,000.
The remaining $30,000 from the 10,000 shares bought back at $15 per share will be notated as a retained earnings debit.
Finish the notation with a cash credit in the full amount—the example would be a cash credit of $150,000.
 Using the constructive retirement method for the buy back of shares eliminates the common stock and additional paid-in capital amounts so they can be written in as a credit along with the retained earnings. This method is used when it is assumed that the stock will not be reissued.
Buy back the number of shares of stock your board has decided on.
Record the transaction.
Understand that the common stock and additional paid-in capital amounts are eliminated.
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