Part III (3 marks)

In August 2022, the government reduced the company tax rate from 30% to 25%, effective from 1 July 2022. As at 30^th June 2022, the balance of deferred tax accounts for Keepfit Ltd were as follows:

Deferred tax asset $ 21,000

Deferred tax liability $ 60,000

Required:

Provide journal entries to recognize the effect of the change in tax rates