Purse Corporation owns 70 percent of Scarf Companys voting shares. On January 1, 20X3, Scarf sold bonds with a par value of $750,000 at 98. Purse purchased $500,000 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.)

Interest Expense = ???

b. Prepare the journal entries Purse recorded during 20X4 with regard to its investment in Scarf bonds. (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.)

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.)

X Answer is complete but not entirely correct. No Date General Journal Debit Credit 1 January 1, 20X4 Cash 40,000 Interest receivable 40,000 2 July 1, 20X4 Cash 40,000 X 10,000 X Investment in Scarf Company bonds Interest income 50,000 x 3 40,000 X December 31, 20% Cash Investment in Scarf Company bonds 10,000 X Interest income 50,000 X X Answer is not complete. No Event Accounts Debit Credit A 1 Bonds payable 500,000 Interest income Investment in Scarf Company bonds 4,000 Bond discount Interest expense 50,000 X B 2 Interest payable 40,000 X Interest receivable 40,000 X