The following combined income and retained earnings statement, along with selected balance sheet data, is provided for Gemini Corporation:
Gemini Corporation
Combined Income and Retained Earnings Statement
For the Year Ended December 31, 2013
Revenues:
Net sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $340,000
Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000*
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $346,000
Expenses:
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $188,000
Selling and administrative expenses . . . . . . . . . . . . . . . . . . . . . 52,600
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,500
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257,300
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 88,700
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,850
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 66,850
Retained earnings, January 1, 2013 . . . . . . . . . . . . . . . . . . . 56,000 ........... $122,850
Dividends declared and paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000
Retained earnings, December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $106,850
*Gain on sale of equipment (cost, $20,000; book value, $12,000; sales price, $18,000).
Balance Sheet Amounts
..................................................... Beginning of Year ...................... End of Year
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . $47,000 ...................... $53,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,400 ......................... 75,400
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 .............................. 3,600
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . 31,800 ............................ 38,300
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500 ............................... 4,300
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . 2,900 ............................... 7,200
Instructions:
1. Using the direct method, compute the amount of net cash provided by (used in) operating activities for Gemini Corporation for 2013.
2. What is the impact of dividends paid on net cash flow from operations? Explain.