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 $20$X$4$ consolidated income statement?

b$.$ Prepare the journal entries Purse recorded during $20$X$4$ with regard to its investment in Scarf bonds.

$$ Record the interest received on the bonds on January $1,20$X$4$

$$ Record the interest received on the bonds on July $1,20$X$4$

$$ Record the interest receivable on the bonds on December $31,20$X$4$

c$.$ Prepare all worksheet consolidation entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for $20$X$4.$

$$ Record the entry to eliminate the effects of the intercompany ownership in the bonds.

$$ Record the entry to eliminate intercompany receivables or payables.