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Recording Income Tax Expense Nike, Inc., reports the following tax information in the notes to its 2018 financial report. Income before income taxes is as

Recording Income Tax Expense

Nike, Inc., reports the following tax information in the notes to its 2018 financial report. Income before income taxes is as follows:

Year Ended May 31 (In millions) 2018 2017 2016
Income before income taxes:
United States $744 $1,240 $956
Foreign 3,581 3,646 3,667
$4,325 $4,886 $4,623

The provision for income taxes is as follows:

Year Ended May 31 (In millions) 2018 2017 2016
Current:
United States
Federal $1,167 $398 $304
State 45 82 71
Foreign 533 439 568
1,745 919 943
Deferred:
United States
Federal 595 (279) (57)
State 25 (9) (16)
Foreign 27 15 (7)
647 (273) (80)
$2,392 $646 $863

Nike also states the following:

The effective tax rate for the year ended May 31, 2018 was higher than the effective tax rate for the year ended May 31, 2017 primarily due to the enactment of the Tax Act, which included provisional expense of $1,875 million for the one-time transition tax on the deemed repatriation of undistributed foreign earnings, and $158 million due to the remeasurement of deferred tax assets and liabilities

Required a. Record Nike's provision for income taxes for 2018 using the financial statement effects template.

Enter answers in millions in the appropriate account columns,using the second row only if additional space is needed. Use a negative sign with answers, when appropriate.

Balance Sheet Income Statement
Transaction Cash Asset + Noncash Asset = Liabilities + Contrib. Capital + Earned Capital Revenues - Expenses = Net Income
To record income tax expense Answer + Answer = $1,745 + Answer + Answer Answer - Answer = Answer
Answer + Answer = Answer + Answer + Answer Answer - Answer = Answer

b. Record Nike's provision for income taxes for 2018 (in millions) using journal entries.

General Journal
Description Debit Credit
AnswerDeferred income taxesIncome taxes payableIncome tax expense Answer Answer
Income taxes payable Answer Answer
AnswerDeferred income taxesIncome taxes payableIncome tax expense Answer Answer

c. Explain how the provision for income taxes affects Nike's financial statements.

Net income AnswerIncreasedDecreasedNo change by Answer million
Liabilities AnswerIncreasedDecreasedNo change by Answer million

d. Calculate and compare Nike's effective tax rate for 2018, 2017, and 2016. Round to one decimal place.

2018 Answer
2017 Answer
2016 Answer

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