Moritz Company analyzed its temporary differences as of December 31, 2008. The enacted tax rate was 40% for 2008 and all future tax years.

The total amount of taxable temporary differences as of the end of 2008 was $110,000. All the temporary differences relate to noncurrent items.

Instructions:

1. Assume that in early 2009 the taxing authority changed the rates for 2009 and beyond to 34%. Prepare the 2009 journal entry to record the tax rate decrease.

2. Assume that instead of being decreased, the tax rate was increased to 46% in early 2009. Prepare the 2009 journal entry to record the tax rate increase.