Sweeney & Associates, a large marketing firm, adjusts its accounts at the end of each month. The following information is available for the year ending December 31, 2011:

1. A bank loan had been obtained on December 1. Accrued interest on the loan at December 31 amounts to $1,200. No interest expense has yet been recorded.

2. Depreciation of the firm’s office building is based on an estimated life of 25 years. The building was purchased in 2007 for $330,000.

3. Accrued, but unbilled, revenue during December amounts to $64,000.

4. On March 1, the firm paid $1,800 to renew a 12-month insurance policy. The entire amount was recorded as Prepaid Insurance.

5. The firm received $14,000 from King Biscuit Company in advance of developing a six-month marketing campaign. The entire amount was initially recorded as Unearned 6. Revenue. 

At December 31, $3,500 had actually been earned by the firm.

6 The company’s policy is to pay its employees every Friday. Since December 31 fell on a Wednesday, there was an accrued liability for salaries amounting to $2,400.

a. Record the necessary adjusting journal entries on December 31, 2011.

b. By how much did Sweeney & Associates’s net income increase or decrease as a result of the adjusting entries performed in part a? (Ignore income taxes.)