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 $$735,000$ at $98.$ Purse purchased $$490,000$ 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 $204$ 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 $204.$