Exercise 14-18 (Algorithmic) (LO. 1) On July 1, 2020, Katrina purchased tax-exempt bonds (face value of $179,500) for $197,450. The bonds mature in five years, and the annual interest rate is 3%. If an amount is zero, enter "0". Determine any allocation based on months (not days). a. How much interest income and/or interest expense must Katrina report in 2020? The interest income Katrina must include in gross income in 2020 is The interest expense Katrina may deduct in 2020 is $ b. What is Katrina's adjusted basis for the bonds on January 1, 2021? S