Flynn Design Agency was founded by Kevin Flynn in January 2006. Presented below is the adjusted trial balance as of December 31, 2012.

Instructions(a) Prepare an income statement and a statement of retained earnings for the year ending December 31, 2012, and an unclassified balance sheet at December 31.(b) Answer the following questions.(1) If the note has been outstanding 6 months, what is the annual interest rate on that note?(2) If the company paid $17,500 in salaries and wages in 2012, what was the balance in Salaries and Wages Payable on December 31,2011?

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FLYNN DESIGN AGENCY ADJUSTED TRIAL BALANCE DECEMBER 31, 2012 Cr. Dr. $ 10,000 Cash Accounts Receivable 21.500 Supplies Prepaid Insurance Equipment Accumulated Depreciation-Equipment Accounts Payable Interest Payable Notes Payable 5,000 2.500 60,000 $ 35,000 8,000 150 5,000 5,600 Unearned Service Revenue Salaries and Wages Payable Common Stock 1,300 10,000 3,500 58,500 Retained Earnings Service Revenue Salaries and Wages Expense Insurance Expense Interest Expense Depreciation Expense Supplies Expense Rent Expense 12,300 850 500 7,000 3,400 4,000 $127,050 $127,050