Wood Corporation owns 1 percent of Carter Companys voting shares. On January 1, 20X3, Carter sold bonds with a par value of $742,500 at 98. Wood purchased $495,000 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.

A. What amount of interest expense should be reported in the 20X4 consolidated income statement?

B. Prepare the journal entries Wood recorded during 20X4 with regard to its investment in Carter bonds

Record the interest received on the bonds Jan.1.

Record the interest received on the bonds July 1.

Record the interest receivable on the bonds Dec 31.

C. Prepare all worksheet consolidation entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X4.

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

Record the entry to eliminate the intercompany interest receivables/payables.

Please explain how to do this. I can not figure out the interest expense.