The following cash flow information pertains to the 2017 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 income taxes..........................................2,350

Cash provided by operating activities.......................................372

The following additional information comes from Fishmaster's 2017 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 2016 and 2017 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 2017 income statement.

2. Use the same information to compute Fishmaster's 2017 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.