Purse Corporation owns 70 percent of Scarf Company's voting shares. On January 1, 20X3. 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 Required: a. What amount of interest expense should be reported in the 20x4 consolidated income statement? (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) Answer is complete but not entirely correct. Interest expense $ 16,800 x Return b. Prepare the journal entries Purse recorded during 20X4 with regard to its investment in Scarf bonds. (If no entry is require transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculation your final answers to nearest whole dollar.) Answer is complete but not entirely correct. No Date General Journal Debit Credit 1 January 1, 20X4 Cash 16,000 Interest receivable 16,000 2 July 1, 20X4 Cash 16,000 Investment in Scarf Company bonds 800 X Interest income 16,800 X 3 December 31, 20x Interest receivable 16.000 > X Investment in Scarf Company bonds 800 X X Answer is complete but not entirely correct. No Date General Journal Debit Credit 1 January 1, 20X4 Cash 16,000 Interest receivable 16,000 2 Cash July 1, 20X4 16,000 Investment in Scarf Company bonds 800 x Interest income o 16,800 16,000 3 December 31, 20X Interest receivable 800 X Investment in Scarf Company bonds 16,800 x Interest income c. Prepare all worksheet consolidation entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X4. (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.) Answer is complete but not entirely correct. No Event Accounts Debit Credit 1 Bonds payable 400,000 33,600 X Interest income Investment in Scarf Company bonds 395,200 Bond discount 4,800 Interest expense 33,600 X B 16,000 2 Interest payable Interest receivable 16,000