Santo Design was founded by Thomas Grant in January 2016. Presented below is the adjusted trial balance as of December 31, 2025.

Instructions
a. Prepare an income statement and a retained earnings statement for the year ending December 31, 2025, 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 in 2025, what was the balance in Salaries and Wages Payable on December 31, 2024?

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Cash Accounts Receivable Supplies Prepaid Insurance Santo Design Adjusted Trial Balance December 31, 2025 Equipment Accumulated Depreciation-Equipment Accounts Payable Interest Payable Notes Payable Unearned Service Revenue Salaries and Wages Payable Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Insurance Expense Interest Expense Depreciation Expense Supplies Expense Rent Expense Dr. $ 11,350 21,500 5,000 2,500 60,000 11,300 850 150 7,000 3,400 4,000 $127,050 Cr. $ 35,000 5,000 150 5,000 5,600 1,300 10,000 3,500 61,500 $127,050