Sable Company purchased merchandise for resale on 1 January 20X5, for \($5,000\) cash plus a \($20,000\), two-year note payable. The principal is due on 31 December 20X6; the note specified 3% interest payable each 31 December. Assume that Sable’s going rate of interest for this type of debt was 8%. The accounting period ends 31 December.

Required:
1. Give the entry to record the purchase on 1 January 20X5. Show computations (round to the nearest dollar).
2. Complete the following tabulation:

3. Give the entries at each year-end for Sable.

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Amount of cash interest payable each 31 December Total interest expense for the two-year period Amount of interest expense for 20X5 Amount of net liability reported on the statement of financial position at 31 December 20X5 $ $ A A A $ $ EA