Santo Design was founded by Thomas Grant in January 2011. Presented below is the adjusted trial balance as of December 31, 2020.

Instructions

a. Prepare an income statement and a retained earnings statement for the year ending December 31, 2020, 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 2020, what was the balance in Salaries and Wages Payable on December 31, 2019?

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Santo Design Adjusted Trial Balance December 31, 2020 Dr. Cr. $ 11,350 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 5,000 150 5,000 Unearned Service Revenue 5,600 Salaries and Wages Payable 1,300 Common Stock 10,000 Retained Earnings 3,500 Service Revenue 61,500 Salaries and Wages Expense Insurance Expense Interest Expense Depreciation Expense Supplies Expense Rent Expense 11,300 850 150 7,000 3,400 4,000 $127,050 $127,050