Gardner Enterprises reported a net loss of $55,000 for the year just ended. Relevant data for the company follow.

Required:
1. Using the indirect method, determine the net cash flows provided by (used in) operating activities for Gardner.
2. Interpretive Question: Explain how Gardner can pay cash dividends during a year when it reports a netloss.

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Beginning of Year End of Year Cash and cash equivalents Accounts receivable (net) Inventory Prepaid expenses. Accounts payable. Accrued liabilities Dividends payable Depreciation for the year, S60,000 Dividends declared, $35,000 S 70,000 S 40,000 170,000 8,000 60,000 6,000 150,000 12,000 14,000 25,000 35,000