On December 31, 2019, the Town Hall Company had a deferred tax liability balance of $12,570, arising from an excess of MACRS depreciation for tax purposes over straight-line depreciation for accounting purposes. The tax effects of that timing difference are expected to reverse in the following years:

Year	Timing Difference	Enacted Tax Rate	Deferred Tax Liability
2020	$16,000	30%	$4,800
2021	9,500	35%	3,325
2022	12,700	35%	4,445
			$12,570

On January 27, 2020, Congress raised the effective income tax rate to 38% for all future years, including the current year, 2020.

Required:

Prepare the entry to record any adjustments necessary due to the income tax rate increase on January 27, 2020.

Chart of Accounts

CHART OF ACCOUNTS

Town Hall Company

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
160	Deferred Tax Asset
181	Equipment
198	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
260	Deferred Tax Liability
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expense
910	Income Tax Expense

General Journal

Prepare the entry to record any adjustments necessary due to the income tax rate increase on January 27, 2020.