You need to enter the 1099-MISC for the correct amount of $1,300.
You can enter the $3,800 as other self-employed income by cash or check.
Just be sure that you are deducting all expenses associated with selling the Norwex. (party expenditures, promo items, items purchased for resale, mileage for conducting business, etc.) I'm familiar with the product as my mother-in-law sells Norwex.
