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

Santo Design Adjusted Trial Balance December 31, 2025
		Dr.		Cr.
Cash		$ 11,815
Accounts Receivable		22,315
Supplies		5,815
Prepaid Insurance		3,315
Equipment		60,815
Accumulated DepreciationEquipment				$ 35,815
Accounts Payable				5,815
Interest Payable				234
Notes Payable				7,800
Unearned Service Revenue				6,415
Salaries and Wages Payable				1,504
Common Stock				10,815
Retained Earnings				4,315
Service Revenue				62,315
Salaries and Wages Expense		12,115
Insurance Expense		1,054
Interest Expense		584
Depreciation Expense		9,800
Supplies Expense		3,400
Rent Expense		4,000
		$135,028		$135,028

Instructions

1. Prepare an income statement and a retained earnings statement for the year ending December 31, 2025, and an unclassified balance sheet at December 31.
2. 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?