Alpine Expeditions operates a mountain climbing school in Colorado. Some clients pay in advance for services; others are billed after services have been performed. Advance payments are credited to an account entitled Unearned Client Revenue. Adjusting entries are performed on a monthly basis. An unadjusted trial balance dated December 31, 2011, follows. (Bear in mind that adjusting entries have already been made for the first 11 months of 2011, but not for December.)

Other Data
1. Accrued but unrecorded fees earned as of December 31 amount to $6,400.
2. Records show that $6,600 of cash receipts originally recorded as unearned client revenue had been
earned as of December 31.
3. The company purchased a 12-month insurance policy on June 1, 2011, for $36,000.
4. On December 1, 2011, the company paid $2,200 for numerous advertisements in several climbing magazines. Half of these advertisements have appeared in print as of December 31.
5. Climbing supplies on hand at December 31 amount to $2,000.
6. All climbing equipment was purchased when the business first formed. The estimated life of the equipment at that time was four years (or 48 months).
7. On October 1, 2011, the company borrowed $10,000 by signing an eight-month, 9 percent note payable. The entire note, plus eight months' accrued interest, is due on June 1, 2012.
8. Accrued but unrecorded salaries at December 31 amount to $3,100.
9. Estimated income taxes expense for the entire year totals $14,000. Taxes are due in the first quarter of 2012.

a. For each of the numbered paragraphs, prepare the necessary adjusting entry. (27 points: Each adjusting entry worth 3 points-correct debit account, correct credit account, and correct value)
b. Prepare statement of retained earnings for the year ended December 31, 2011. (3 points: Each line item in the statement of retained earnings worth 1 point)