The following cash flow information pertains to the 2014 operations of Fishmaster, Inc., a maker of fishing

Question:

The following cash flow information pertains to the 2014 operations of Fishmaster, Inc., a maker of fishing equipment.
Cash collections from customers ........... $79,533
Cash payments to suppliers ............ 64,097
Cash payments for selling and administrative expenses . 11,166
Cash payments for interest .............. 1,548
Cash payments for current income taxes ........ 2,350
Cash provided by operating activities ......... 372

The following additional information comes from Fishmaster’s 2014 income statement:
Net income .................. $3,728
Depreciation of equipment ............. 6,380
Gain on sale of equipment ............. 1,327

The following additional information comes from Fishmaster’s 2013 and 2014 comparative balance sheets (decreases are in parentheses):
Change in ........... $ 1,850
Change in inventory ............... 5,299
Change in ............. (1,711)
Change in accrued selling and administrative expenses .. 910
Change in deferred taxes payable .......... (342)
Change in accrued interest payable .......... (117)

Required:
1. Use the preceding information to derive Fishmaster’s 2014 income statement.
2. Use the same information to compute Fishmaster’s 2014 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.

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