(using the formula [(697500-465000)*.08] + [{(697500-465000)*.02}/5] does not generate the correct answer.

Please show step by step for the answers in Red

Purse Corporation owns 70 percent of Scarf Company's voting shares. On January 1, 20X3, Scarf sold bonds with a par value of $697,500 at 98. Purse purchased $465,000 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 13,950 S 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.) No Date Answer is complete but not entirely correct. General Journal Debit 18,600 Interest receivable Credit 1 January 1, 20X4 Cash 18,600 2 July 1, 20X4 Cash Investment in Scarf Company bonds Interest income 18,600 9,300 19,530 3 December 31, 20% Interest receivable Investment in Scarf Company bonds Interest income 18,600 5,580 19,530 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.) No Event Credit A 1 Answer is complete but not entirely correct. Accounts Bonds payable Interest income Investment in Scarf Company bonds Bond discount Interest expense Debit 465,000 18,600 459,420 5,580 39,060 B 2 18,600 Interest payable Interest receivable 18,600 Purse Corporation owns 70 percent of Scarf Company's voting shares. On January 1, 20X3, Scarf sold bonds with a par value of $697,500 at 98. Purse purchased $465,000 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 13,950 S 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.) No Date Answer is complete but not entirely correct. General Journal Debit 18,600 Interest receivable Credit 1 January 1, 20X4 Cash 18,600 2 July 1, 20X4 Cash Investment in Scarf Company bonds Interest income 18,600 9,300 19,530 3 December 31, 20% Interest receivable Investment in Scarf Company bonds Interest income 18,600 5,580 19,530 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.) No Event Credit A 1 Answer is complete but not entirely correct. Accounts Bonds payable Interest income Investment in Scarf Company bonds Bond discount Interest expense Debit 465,000 18,600 459,420 5,580 39,060 B 2 18,600 Interest payable Interest receivable 18,600