Earth Star Diamonds Inc. began a potentially lucrative mining operation on October 1, 2020. It is authorized to issue 100,000 shares of $0.60 cumulative preferred shares and 500,000 common shares. The company uses the cash dividends account to keep track of all dividends declared. Part A Required: Prepare journal entries for each of the transactions listed. Oct. 1 Issued for cash, 1,000 shares of the preferred shares at 35.50 each. 10 Issued for cash, 57,000 shares of the common stock at $4.30 per share. 15 Earth star purchased land for $193,00, paying cash of $6,500 and borrowing the balance from the bank (to be repaid in the years). 20 18,500 preferred shares were issued today for total cash proceeds of $105,635. 24 In addition to the declaration of the annual dividend on the preferred shares dividends of $26,950 were declared on the common shares today, payable November 15, 2020 31 Revenues of 5970,000 were earned during the month all cash. Expenses, all cash, totalling $335,000 were incurred in October. Close the Income Summary and dividend accounts. View transaction list Journal entry worksheet 1 2 3 4 5 6 7 B 9 Record the issue of preferred shares. No Es before credits General Journal Debit Credit Date October 01 2020 Record entry Clear entry View general journal Part B Required: Based on the transactions in Part A prepare the balance sheet as at October 31, 2020 EARTH STAR DIAMONDS INC Balance Sheet October 31, 2020 Assets Current sets: Property, plant and equipment Total Liabilities Current bibes Non current abilities Total liabilities 0 Contributed Capital Equity Total contbuted capital O Tablequity Total liabilities and equity 3 Earth Star Diamonds Inc. began a potentially lucrative mining operation on October 1, 2020. It is authorized to issue 100,000 shares of $0.60 cumulative preferred shares and 500,000 common shares. The company uses the cash dividends account to keep track of all dividends declared. Part A Required: Prepare journal entries for each of the transactions listed. Oct. 1 Issued for cash, 1,800 shares of the preferred shares at $5.50 each. 10 Issued for cash, 57,000 shares of the common stock at 4.30 per share. 15 Earth star purchased land for $193,000, paying cash of $69,see and borrowing the balance from the bank (to be repaid in two years). 20 18,500 preferred shares were issued today for total cash proceeds of $1e5,635. 24 In addition to the declaration of the annual dividend on the preferred shares, dividends of $26,950 were declared on the common shares today, payable November 15, 2020. 31 Revenues of $970,000 were earned during the month; all cash. Expenses, all cash, totalling $335,eee were incurred in October. Close the Income Summary and dividend accounts. View transactions Journal entry worksheet 1 3 4 5 6 Record the issue of preferred shares, + No more General Journal Delint Date October 01 2020 Credit Record try Chaarely View general jou Part B Required: Based on the transactions in Part A prepare the balance sheet as at October 31, 2020. EARTH STAR DIAMONDS INC. Balance Sheet October 31, 2020 Assets + Current assets Property, plant and equipment: Total assets 5 Liabilities Current liabilities Non current liabilities $ 0 Total liabilities Equity Contributed Capital 0 Total contributed capital Total equity Total liabilities and equity 5 0
