When a company reacquires shares at a loss and there is no balance in contributed capital, then there will be a debit to retained earnings for the amount of the loss.

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When a company reacquires its own shares at a price higher than what it originally sold them for (resulting in a loss), and there is no balance in the contributed capital from treasury stock transactions to absorb the loss, the loss is debited to retained earnings. This reduces the amount of earnings available for distribution to shareholders.

When a Company Reacquires Shares at a Loss and There