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.

Required: Prepare journal entries for each of the transactions listed.

Oct.	1		Issued for cash, 1,000 shares of the preferred shares at $4.40 each.
	10		Issued for cash, 46,000 shares of the common stock at $3.20 per share.
	15		Earth star purchased land for $182,000, paying cash of $64,000 and borrowing the balance from the bank (to be repaid in two years).
	20		13,000 preferred shares were issued today for total cash proceeds of $72,800.
	24		In addition to the declaration of the annual dividend on the preferred shares, dividends of $26,840 were declared on the common shares today, payable November 15, 2020.
	31		Revenues of $860,000 were earned during the month; all cash. Expenses, all cash, totalling $280,000 were incurred in October. Close the Income Summary and dividend accounts.

• Record the issue of preferred shares.
• Record the issue of common shares
• Record the purchase of land in exchange for cash and a note.
• Record the issue of preferred shares for cash.
• Record the dividends declared on common and preferred shares.
• Record the revenues earned.
• Record the expenses incurred.
• Record to close the income summary account.
• Record to close the cash dividends account, assuming Retained Earnings was not debited directly when dividends were declared.

No Date General Journal Debit Credit 1 October 01, 2020 Cash 4,400 Preferred dividends payable 4,400 2 October 10, 2020 Cash 147,200 Common shares 147,200 3 October 15, 2020 Land 182,000 Cash Notes payable 64,000 118,000 4 October 20, 2020 Cash 72.800 Preferred shares 72,800 5 October 24, 2020 26,840 26,840 Retained earnings Common dividends payable Retained earnings Preferred dividends payable 8,400 8,400 6 October 31, 2020 Cash 860,000 Revenues 860,000 7 October 31, 2020 Income summary 280,000 Cash 280,000 8 October 31, 2020 Income summary Retained earnings 9 October 31, 2020 Retained earnings Common dividends payable EARTH STAR DIAMONDS INC. Balance Sheet October 31, 2020 Assets Current assets: Cash $ 740,400 Property, plant and equipment: Land 182,000 Total assets $ 922,400 Liabilities Current liabilities Dividends payable GA 35,240 Non current liabilities: Long term note payable 118,000 $ 153,240 Total liabilities Equity Contributed Capital: Preferred shares. $0.60 cumulative, 100,000 shares authorized, 14,000 shares issued and outstanding Common shares, 500,000 shares authorized, 46,000 shares issued and outstanding $ 77,200 147,200 Total contributed capital $ 224,400 Total equity Total liabilities and equity 224,400 $ 377,640