Arcadia Enterprises provided the following information regarding book-tax differences for its first year of operations:

Source of Book-Tax Difference	GAAP	Tax
Installment Sales: Income recognized	$506,000	$118,000
2-year Warranty Costs: Warranty Expense	61,000	43,000
Depreciation Expense	86,000	126,00

Installment sales are a normal part of Arcadia's operations. The depreciation expense is related to a building costing $ 1,500,000 Income before including any of the book-tax differences above is $ 955, 000.

Deferred tax assets are expected to be fully realized and, as a result, no allowance account is needed. Arcadia is subject to a 40% income tax rate.

Requirement Prepare the journal entry/entries necessary to record the effects of a tax-rate reduction from

40% to 34% effective the beginning of Year 2.