Exercise $8-3.$A $($Static$)$ Bond Sale at Discount $($Straight$-$line Method$)$ LO $8-2$

Purse Corporation owns $70$ percent of Scarf Company's voting shares. On January $1,20$X$3,$ Scarf sold bonds with a par value of $$600,000$ at $98.$ Purse purchased $$400,000$ par value of the bonds; the remainder was sold to nonaffiliates. The bonds mature in five years and pay an annual interest rate of $8$ percent. Interest is paid semiannually on January $1$ and July $1.$

Note: Assume using straight$-$line amortization of bond discount or premium.

Required:

a$.$ What amount of interest expense should be reported in the $204$ consolidated income statement?

b$.$ Prepare the joumal entries Purse recorded during $204$ with regard to its investment in Scarf bonds.

c$.$ Prepare all worksheet consolidation entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for $204.$

Answer is not complete.

Complete this question by entering your answers in the tabs below.

Requined A

Requlred B

Required C

Prepare all worksheet consolidation entries needed to remove the effects of the intercorporate bond ownership In preparing consolidated financial statements for $204.$

Note: If no entry is required for a transaction$/$event$,$ select $"$No joumal entry required $"$in the first account field. Do not round your Intermedlate calculations. Round your final answers to nearest whole dollar:

$\backslash$table$[[$No$,$Event,Aecounits,,Deblit,Credil$],[$A$,1,$Bonde payable,$(2),400,0009,5],[$m$,8,$Interest income,$2),16,8008,],[,4,$Investment in Scarf Company bonds,$2,800(8),],[,3,$Bond discount,$2,8,0008,],[-,-,$Interest expenge,$(1).,51,425,6008],[5,,4),1,1010,175],[$B$,2,$Interest payable,$(9),16,0000,],[\frac{?}{\text{b}\text{a}\text{r}}(r),5,$Interest recaivable,Q$,$P$.,16,000Q$