Preparing the Operating Activities Section The following items are relevant to the preparation of a statement of cash flows for Maxwell Inc. 1. Net loss for the year was $32,000. Depreciation expense was $80,000. 2. Wrote off a $6,400 account. During the year, gross accounts receivable increased $160,000, and the allowance for doubtful accounts increased $16,000. All sales of $960,000 are on account. 3. Pension expense is $160,000 while funding for the pension plan was $128,000. 4. Deferred tax liability increased $128,000, income taxes payable decreased $32,000, and income tax expense was $352,000. 5. $32,000 of interest was capitalized. Interest expense is $160,000. There is no change in interest payable. 6. Sold short-term investments (not held in a trading account) at a $6,400 gain, proceeds $25,600. 7. Merchandise inventory decreased by $16,000, accounts payable decreased by $8,000, and salaries payable increased by $22,400. Required Prepare the reconciliation of net income with cash flow from operations for inclusion in the statement of cash flows (indirect method). Note: If an item is not included in the operating activities section, leave the answer blank (zero). Cash flows from Operating Activities Net loss Adjustments: Depreciation expense Pension expense 0 Income tax expense 0 Capitalized interest 0 Gain on sale of short-term investments Increase in accounts receivable 0 Increase in deferred tax liability 0 Decrease in income taxes payable 0 Decrease in merchandise inventory 0 Decrease in accounts payable 0 Increase in salaries payable Net cash provided used by Operating activities S 0 0 0