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On December 31, 2010 the south Padre Company had a deferred tax liability balance of $8100 arising from an excess of MACRS depreciation for tax purpose 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
2011 6000 30% 1800
2012 8000 35% 2800
2013 10000 35% 3500
8100

On January 27, 2011, Congress raised effective income tax rate to 38% for all future years, including the current year, 2011.

Required:

Prepare the entry record any adjustments necessary due to the income tax rate increase on January 27, 2011.

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