Exercise $8-3($Algo$)$ Bond Sale at Discount $($Effective Interest 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

$$682,500$ at $98.$ Purse purchased $$455,000$ 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 $1.$

Required:

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

b$.$ Prepare the journal entries Purse recorded during $20$X$4$ 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 $20$X$4.$

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

Required $A$

Required C

Prepare all worksheet consolidation entries needed to remove the effects of the intercorporate bond ownership in preparing

consolidated financial statements for $20x4.$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Do not round

your intermediate calculations. Round your final answers to nearest whole dollar.