For the month of September, Touche Andersen & Company worked 300 hours for client A and 700 hours for client B. Touche Andersen bills clients at the rate of $140 per hour, whereas the labor cost for its audit staff is $70 per hour. The total number of hours worked in September was 1,000, and overhead costs were $10,000. Overhead is applied at $12 per labor hour. Overhead is assigned to clients. In addition, Touche Andersen & Company had $42,000 in marketing and administrative costs. All transactions are on account. All services were billed.

a. Show labor and overhead cost flows through T-accounts.

b. Prepare an income statement for the company for September.