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Question - MV Ltd was registered on the first of July 2020. The company's directors issue a disclosure document inviting applicants for 2 000 000 ordinary shares for an issue price of $0.80. The share is payable 60c on application and 20c on allotment. MV Ltd reserves the right to allot to individual applicants on a pro rata basis, a lesser number of shares than the number applied for, and may apply excess application monies to the allotment and to calls in advance. The company's director must allot exactly 2 000 000 shares.
Applications for 2 500 000 shares are received with the correct application money.
Required - Calculate the amount of application money that would be applied to application and calls (including allotment). Prepare journal entries.
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