Generally, the accounting for an S corporation is the same as that for a regular C corporation. However, while certain equity accounts of an S corporation and a C corporation are the same, their definition is different due to the disparate tax treatment of each entity.
Regardless of the number of owners, an S corporation should have four main equity accounts for each, including common stock issued at par (nominal) value, additional paid-in capital (APIC), distributions paid out to shareholders, and retained earnings. Common stock and APIC together represent the total capital invested in the corporation by each shareholder. These accounts are distinct although the par or nominal value of shares has no practical effect in this situation. Nonetheless, each owner should have his own account for APIC and distributions paid to track that individual owner's total capital contributions and net distributions.
S Corporation vs. C Corporation
An S corporation can have only one class of stock, so the C corporation's equity account that would otherwise track both preferred and common stock is effectively only a common stock account for an S corporation. Likewise, an S corporation doesn't technically pay dividends. As a pass-through entity, it instead allocates its profits and losses to owners, so what would otherwise be called dividends are distributions of earnings and profit. Also, an S corporation's retained earnings equity account is not identical to the retained earnings account of a C corporation. Since a C corporation is taxed on its earnings at the corporate level, its retained earnings account reflects after-tax money that the corporation holds onto instead of paying out as dividends. In contrast, an S corporation's retained earnings account is pre-tax money that has been allocated to owners but not distributed.
As a result of these differences, if an S corporation is changed back into a C corporation, you cannot simply keep using these equity accounts as if they mean the same thing under an S corporation tax structure as they do under a C corporation tax structure. There would need to be complicated calculations and adjustments in order to reconcile the accounts to reflect the proper tax-adjusted balances.