The income statement for Tremblant Limited is presented here:

TREMBLANT LIMITED

Income Statement

Year Ended December 31, 2015

Service revenue ........................................................... $925,000

Operating expenses .........................................................701,000

Profit from operations ......................................................224,000

Interest expense ...............................................................75,000

Profit before income tax ....................................................149,000

Income tax expense ...........................................................37,250

Profit .........................................................................$111,750

Tremblant's statement of financial position contained these comparative data at December 31:

Additional information:
1. Operating expenses include depreciation expense, $50,000; amortization expense, $15,000; administrative expenses, $110,000; salaries expense, $500,000; and loss on the disposal of equipment, $26,000.
2. Unearned revenue is received from customers.
3. Prepaid expenses and accounts payable relate to operating (administrative) expenses.
Instructions
(a) Prepare the operating activities section of the statement of cash flows, using either
(1) The indirect method
(2) The direct method, as assigned by your instructor.
(b) Which method-indirect or direct-do you recommend that this company use to prepare its operating activities section? Explain your reasoning.

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Accounts receivable Prepaid expenses Accounts payable Salaries payable Unearned revenue Interest payable Income tax payable 2015 $57,000 12,000 36,000 19,500 12,000 2014 $47,000 15,000 41,000 20,000 9,000 5,000 9,250 4,000