The accounting records of Action Athletics, Inc., reveal the following:
Net Income .....................................................................................$22,000
Depreciation Expense....................................................................... 9,000
Sales Revenue.................................................................................. 21,000
Decrease in current liabilities............................................................28,000
Loss on sale of land.......................................................................... 2,000
Increase in current assets other than Cash ......................................10,000
Acquisition of land .........................................................................39,000

Requirements
1. Compute cash flows from operating activities by the indirect method. Use the format of the operating activities section shown in Exhibit 11-3 .
In Exhibit 11-3 .
Mackay Industries, Inc.
Statement of Cash Flows
Year Ended December 31, 2012
Cash flows from operating activities:
Net Income
Adjustments to reconcile net income to ne – t cash
provided by operating activities:
+ Depreciation / amortization expense
+ Loss on sale of long-term assets
– Gain on sale of long-term assets
– Increases in current assets other than cash
+ Decreases in current assets other than cash
+ Increases in current liabilities
– Decreases in current liabilities
Net cash provided by (used for) operating activities
+ Cash flows from investing activities:
+ Cash receipts from sales of long-term assets
(investments, land, building, equipment, and so on)
– Purchases of long-term assets
Net cash provided by (used for) investing activities
+ Cash flows from financing activities:
+ Cash receipts from issuance of stock
+ Sale of treasury stock
– Purchase of treasury stock
+ Cash receipts from issuance of notes or bonds
payable (borrowing)
– Payment of notes or bonds payable
– Payment of dividends
Net cash provided by (used for) financing activities
= Net increase (decrease) in cash during the year
+ Cash at December 31, 2011
= Cash at December 31, 2012
2. Evaluate the operating cash flow of Action Athletics, Inc. Give the reason for your evaluation.