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 $44,000. Depreciation expense was $110,000. 2. Wrote off a $8,800 account. During the year, gross accounts receivable increased $220,000, and the allowance for doubtful accounts increased $22,000. All sales of $1,320,000 are on account. 3. Pension expense is $220,000 while funding for the pension plan was $176,000. 4. Deferred tax liability increased $176,000, income taxes payable decreased $44,000, and income tax expense was $484,000. 5. $44,000 of interest was capitalized. Interest expense is $220,000. There is no change in interest payable. 6. Sold short-term investments (not held in a trading account) at a $8,800 gain, proceeds $35,200. 7. Merchandise inventory decreased by $22,000, accounts payable decreased by $11,000, and salaries payable increased by $30,800. 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 44,000 x Adjustments Depreciation expense 110,000 Pension expense 220,000 X Income tax expense 484,000 X Capitalized interest 44,0 Gain on sale of short-term investments 8,800 X Increase in accounts receivable Increase in deferred tax liability Decrease in income taxes payable 0 % Decrease in merchandise Inventory 0X Decrease in accounts payable Increase in salaries payable OX Net cash provided (used) by operating activities $ X 0 X Check