Exercise $8-3($Static$)$ Bond Sale at Discount $($Effective Interest Method$)$ LO $8-2$

Purse Corporation owns $70$ percent of Scarf Company$$s voting shares. On January $1,20$X$3,$ Scarf sold bonds with a par value of $$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:

What amount of interest expense should be reported in the $20$X$4$ consolidated income statement?

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

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

$2$

Required A

Required B

Required C

$0\mathrm{.}62$

points

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

Note: 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.

$\backslash$begin$\{$tabular$\}\{|$l$|$l$|$l$|$c$|$c$|\}$

$\backslash$hline No & $\backslash$multicolumn$\{1\}\{|$c$|\}\{$ Date $\}$ & $\backslash$multicolumn$\{1\}\{$c$|\}\{$ General Journal $\}$ & Debit & Credit $\backslash \backslash$

$\backslash$hline $1$ & January $1,20$X$4$ & Cash & $\backslash (\backslash$checkmark $\backslash )$ & $16,000\backslash \backslash$

$\backslash$hline & & Interest income & $\backslash (\backslash$times $\backslash )$ & $\backslash \backslash$

$\backslash$hline & & & $\backslash (\backslash$checkmark $\backslash )$ & $\backslash (16,000$ ~ $\backslash )\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$

b$.$ Prepare the journal entries Purse recorded during $20$X$4$ 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 $20$X$4.$

Answer is not complete.

Complete this question by entering your answers in the tabs below. Required C

What amount of interest expense should be reported in the $20$X$4$ consolidated income statement?

Note: Do not round your intermediate calculations. Round your final answer to nearest whole dollar.