Refer to Practice 16-4. Assume that the income tax rate is 40% for the current year but that the enacted tax rate for all future years is 46%. Prepare the journal entry or entries necessary to record income tax expense for the year.
In Practice 16-4
On January 1, the company purchased investment securities for $1,000. The securities are classified as trading. By December 31, the securities had a fair value of $1,800 but had not yet been sold. Excluding the trading securities, income before taxes for the year was $10,000. Assume that there are no other book-tax differences. The income tax rate is 40% for the current year and all future years. Prepare the journal entry or entries necessary to record income tax expense for the year.