Cost Accumulation: Service: For the month of August. Correctall Accountants worked 500 hours for Misfit Manufacturing, 150 hours for Hang Ten Surf Shop, and 250 hours for Mandarin Restaurants. Correctall bills clients at $80 an hour, and labor costs are $30 an hour. A total of 1,000 hours were worked in May with 100 hours not billable to clients. Overhead costs of $15,000 were incurred. Overhead was assigned to clients on the basis of direct labor-hours. Since 100 hours were not billable, some overhead was not assigned to jobs. Correctall had $10.000 in marketing and administrative costs. All transactions were on account.

Required:

a. Show the flow of costs through T-accounts.

b. Prepare journal entries for the transactions shown above.

c. Prepare an income statement for the month of May.