Johnson & Johnson is preparing its statement of cash flows for the year ended December 31, 2023. The company's income statement shows net income of $2,500,000, depreciation expense of $400,000, and a loss on the sale of equipment of $50,000. Changes in balance sheet accounts include an increase in accounts receivable of $200,000, a decrease in inventory of $300,000, and a decrease in accounts payable of $150,000.

Using the indirect method, prepare Johnson & Johnson's statement of cash flows for the year ended December 31, 2023. Provide a step-by-step explanation of adjustments made to reconcile net income to operating cash flow.