Question

Exercise 19-02 The following information is available for Buffalo Corporation for 2019 (its first year of operations). 1. Excess of tax depreciation over book depreciation, $36,800. This $36,800 difference will reverse equally over the years 2020-2023. 2. Deferral, for book purposes, of $20,300 of rent received in advance. The rent will be recognized in 2020. 3. Pretax financial income, $322,400. 4. Tax rate for all years, 20%. Compute taxable income for 2019. Taxable income SHOW LIST OF ACCOUNTS Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS

Answer 1

	Part-A : Computation of Taxabel Income - Bufallo Corp.
	Pre Tax Finacial income	$322,400.00
	Less: Excess Tax Depreciation	-$36,800.00
	Add: Rent in Advance	$20,300.00
	Taxable income	$305,900.00
Part-B: Journal Entry
Date	Accoutn Tittle	Debit	Credit
2019	Incoem Tax Expense (322400*20%)	$64,480.00
	Deferred Tax Asset (20300*20%)	$4,060.00
	Deferred Tax Liability (36800*20%)		$7,360.00
	Income Tax Payable (30590*20%)		$6,118.00
Part-c: Journal Entry
Date	Accoutn Tittle	Debit	Credit
2019	Incoem Tax Expense (BF)	$66,240.00
	Deferred Tax Liability (36800*20%)/4	$1,840.00
	Deferred Tax Asset(20300*20%)		$4,060.00
	Income Tax Payable (320100*20%)		$64,020.00