The following cash flow information pertains to the 20X1 operations of Fishmaster, Inc., a maker of fishing equipment.

Cash collections from customers	$ 79,533
Cash payments to suppliers of inventory	64,097
Cash payments for selling and administrative expenses	12,536
Cash payments for interest	1,548
Cash payments for income taxes	980
Cash provided by operating activities	372

The following additional information comes from Fishmaster’s 20X1 income statement:

Net income ........................................ $ 2,401
Depreciation of equipment ............... 6,380

The following additional information comes from Fishmaster’s 20X0 and 20X1 comparative balance sheets (decreases are in parentheses):

Change in accounts receivable	$ 1,850
Change in inventory	5,299
Change in accounts payable	(1,711)
Change in accrued selling and administrative expenses	910
Change in taxes payable	(342)
Change in accrued interest payable	(117)

Required:

1. Use the preceding information to derive Fishmaster’s 20X1 income statement.

2. Use the same information to compute Fishmaster’s 20X1 cash flow from operating activities under the indirect method (that is, derive cash flow from operating activities by making the necessary adjustments to net income).

3. Provide a brief explanation for the difference observed between net income and cash provided by operating activities.