Gardner Enterprises reported a net loss of $40,000 for the year just ended. Relevant data for the company follow.

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Cash and cash equivalents Accounts receivable (net) Inventory Prepaid expenses Accounts payable Accrued liabilities Dividends payable. Depreciation for the year, $43,000 Dividends declared, $35,000 Beginning of Year $ 50,000 80,000 123,000 End of Year $ 20,000 65,000 130,000 7,500 4,500 55,000 60,000 10,000 4,000 25,000 35,000 1. Using the indirect method, determine the net cash flows provided by (used in) operating activities for Gardner Enterprises. 2. Interpretive Question: Explain how Gardner Enterprises can pay cash dividends during a year when it reports a net loss.