Concord Corporation issued 113,000 shares of $19 par value, cumulative, 7% preferred stock on January 1, 2019, for $2,630,000. In December 2021, Concord declared its first dividend of $720,000. (a) Prepare Concord's journal entry to record the issuance of the preferred stock.

(a)

Dr. Cash $2,630,000

Cr. Preferred Stock $2,147,000

Cr. Add-in-Capital excess of par preferred stock $483,000

Explanation:

Preferred stockholders has an advantage that they are paid first when there is any dividend is announced. The residual dividend will be divided into the common stockholders. Any prior years due dividend and current years dividend associated with preferred share will be paid first.

Par value = 113,000 x 19 = $2,147,000

Excess of par value = $2,630,000 - $2,147,000 = $483,000