The following cash flow information pertains to the 2008 operations of Matterhorn, Inc., a maker of ski equipment:

The following additional information comes from Matterhorn’s 2008 income statement:

The following additional information comes from Matterhorn’s 2007 and 2008 comparative balance sheets (decreases are in parentheses):

Required:
1. Use the preceding information to derive Matterhorn’s 2008 income statement.
2. Use the same information to compute Matterhorn’s 2008 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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Cash collections from customers Cash payments to suppliers $ 16,670 19,428 Cash payments for various operating expenses Cash payments for current income taxes Cash provided (used) by operating activities 7,148 200 (10,106)