Recording Income Tax Expense

Nike, Inc., reports the following tax information in Note 9 to its 2014 financial report. Income before income taxes is as follows:

Year Ended May 31 (In millions)	2014	2013	2012
Income before income taxes:
United States	$3,066	$1,231	$799
Foreign	478	2,025	2,212
	$3,544	$3,256	$3,011

The provision for income taxes is as follows:

Year Ended May 31 (In millions)	2014	2013	2012
Current:
United States
Federal	$371	$432	$286
State	93	69	51
Foreign	398	398	488
	862	899	825
Deferred:
United States
Federal	8	0	(47)
State	(3)	(4)	5
Foreign	(16)	(90)	(29)
	(11)	(94)	(71)
	$851	$805	$754

Required a. Record Nikes provision for income taxes for 2014 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.

Balance Sheet
Transaction	Cash Asset	+	Noncash Assets	=	Liabilities	+	Contrib. Capital	+	Earned Capital
To record income tax expense		+		=	$862	+		+
		+		=		+		+

Income Statement
	Revenue	-	Expenses	=	Net Income
		-		=

b. Record Nike's provision for income taxes for 2014 (in millions) using journal entries.

General Journal
Description		Debit	Credit
	Deferred income taxes	Answer	Answer
	Income tax expense	Answer	Answer
	Income taxes payable	Answer	Answer

c. Explain how the provision for income taxes affects Nikes financial statements.

Net income	Decreased	by	$	million
Liabilities	Increased	by	$	million

d. Calculate and compare Nikes effective tax rate for 2014, 2013, and 2012. Round to one decimal place.

2012	%
2013	%
2014	%