For September, Twiddle & Company worked 600 hours for client A and 1,400 hours for client B. Twiddle bills clients at the rate of $140 per hour; labor cost for its audit staff is $70 per hour. The total number of hours worked in September was 2,000, and actual overhead costs were $20,000. Overhead is applied to clients at $12 per labor hour. In addition, Twiddle had $84,000 in selling and administrative costs. All transactions are on account. All services were billed.

Required

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

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