The following events apply to Dill’s Diner for the 2013 fiscal year:

1. Started the company when it acquired $40,000 cash by issuing common stock.

2. Purchased a new stove that cost $26,000 cash.

3. Earned $21,000 in cash revenue.

4. Paid $3,500 of cash for salaries expense.

5. Adjusted the records to reflect the use of the stove. Purchased on January 1, 2013, the stove has an expected useful life of four years and an estimated salvage value of $4,000. Use straight-line depreciation. The adjusting entry was made as of December 31, 2013.

Required

a. Write an accounting equation and record the effects of each accounting event under the appropriate general ledger account headings.

b. Prepare a balance sheet and a statement of cash flows for the 2013 accounting period.

c. What is the net income for 2013?

d. What is the amount of depreciation expense Dill’s would report on the 2014 income statement?

e. What amount of accumulated depreciation would Dill’s report on the December 31, 2014, balance sheet?

f. Would the cash flow from operating activities be affected by depreciation in 2014?