Prepare journal entries to record the transactions

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Question - On 1 January 2020, King Ltd issued a prospectus inviting applications for 400 000 ordinary shares, at an issue price of $8, payable $5 on application, $3 on allotment. By 30 April, applications were received for 390 000 shares. As the minimum required subscription had been reached, on 1 May the directors allotted 390 000 shares. Share issue costs of $1500 were also paid on the same date. All the allotment money was received by 1 June.

Required -

a) Prepare journal entries to record the above transactions.

b) If a share issue is oversubscribed, what action can be taken in relation to excess money received on application?

Reference no: EM133063429

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