when shares are repurchased the treasury stock account is debited to decrease total shareholders equity the cash account is credited to record the expenditure of company cash if the treasury stock is resold later the cash account is increased through a debit while the treasury stock account is decreased this increases total shareholders equity through a credit notation on the balance sheet 
a treasury paid in capital account is also either debited or credited depending on whether the stock was resold at a loss or a gain under the par value method the treasury stock account is debited to decrease total shareholders equity at the time of share repurchase this is done in the amount of the par value of the shares being repurchased the common stock apic account is also debited to decrease it by the amount originally paid over the par value by the shareholders the cash account is credited in the total amount paid out by the company for the share repurchase the net amount is included as either a debit or a credit to the treasury apic account depending on whether the company paid more when repurchasing the stock than the shareholders did originally corporations use buybacks to reduce the amount of shares in circulation thereby boosting their stock price in 2023 the top 500 companies spent nearly 800 billion to repurchase their own shares purpose of treasury stock