Pepper Enterprises owns $95$ percent of Salt Corporation. On January $1,20$X$1,$ Salt issued $$200,000$ of five$-$year bonds at $115.$ Annual interest of $12$ percent is paid semiannually on January $1$ and July $1.$ Pepper purchased $$100,000$ of the bonds on July $1,203,$ at par value. The following balances are taken from the separate $203$ financial statements of the two companies:

a$.$ Compute the amount of interest expense that should be reported in the consolidated income statement for $203.$

b$.$ Compute the gain or loss on constructive bond retirement that should be reported in the $203$ consolidated income statement.

c$.$ Prepare the consolidation worksheet consolidation entry or entries as of December $31,203,$ to remove the effects of the intercorporate bond ownership.