The following cash flow information pertains to the 2014 operations of Matterhorn, Inc., a maker of ski equipment:
Cash collections from customers ....... $ 16,670
Cash payments to suppliers .......................... 19,428
Cash payments for various operating expenses ... 7,148
Cash payments for current income taxes ....... 200
Cash provided (used) by operating activities .. (10,106)

The following additional information comes from Matterhorn’s 2014 income statement:
Net income ................ $ 609
Depreciation of equipment .......... 2,256
Amortization of patents ............ 399
Loss on sale of equipment ............. 169

The following additional information comes from Matterhorn’s 2013 and 2014 comparative balance sheets (decreases are in parentheses):
Change in accounts receivable ........ $ 3,630
Change in inventory ........... 3,250
Change in accounts payable ......... (3,998)
Change in accrued operating expenses ..... (2,788)
Change in deferred taxes payable ....... 127

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