I am saying the adjustment can either e on retained earnings, which would be negative, or could be a lower additional paid in capital account

As an example:
TP has a net income of $150K and  $0 retained earnings but has $150K of additional paid in capital
He wants to buy a truck, and is thinking about either taking a loan for the full $150K and distributing $150K to himself or paying $150K of cash for for the truck.

If he does the first option (take a loan and distribute to himself) he has no net income (the truck is a write off) and he distributes, which shows a negative balance of $150K.  That would go against is additional paid in capital account.  I notice pro series first would debit his retained earnings and then go to the paid in capital account.

On a separate topic, when you have clients that have a balance sheet that is just a little off, do you adjust retained earnings by making an adjustment (you could show them making a cash contribution as Other additions on M2, etc) or do you adjust the additional paid in capital account?