The income statement for Tremblant Limited is presented here:
TREMBLANT LIMITED
Income Statement
Year Ended December 31, 2018
Service revenue....................................................$925,000
Operating expenses................................................701,000
Income from operations.........................................224,000
Interest expense.......................................................75,000
Income before income tax.....................................149,000
Income tax expense.................................................37,250
Net income..........................................................$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, and (2) the direct method.
(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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2018 2017 Accounts receivable $57,000 $47,000 Prepaid expenses 12,000 15,000 Accounts payable 36,000 41,000 Salaries payable19,500 20,000 Unearned 9,000 Interest payable Income tax payable 4,000 9,250 revenue 12,000 6,250 5,000