The correct calculation for cash flow from operating activities is:

• Net income: 10,000
• Add: Decrease in working capital: 2,000 (a decrease in working capital is a source of cash)
• Subtract: Gain on debt retirement: 500 (a gain is a non-operating item and should be excluded from operating cash flow)

Thus, the correct cash flow from operating activities is 10,000 + 2,000 - 500 = 11,500.

Why not A or C?

• A incorrectly reverses the signs for all adjustments, leading to an incorrect total of 8,500.
• C incorrectly adds the gain on debt retirement instead of subtracting it, resulting in an incorrect total of 12,500.