What is the proper entry to record the december

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Reference no: EM133921753

Problem

On January 1, 2021, Textainer purchased one container, that will be used in its business, for $10,000 in cash. The salvage value of this container is $1,000. The useful life of this container is estimated at 15 years. Additionally, Textainer incurred $150 in costs, on the purchase date, to put decals on the container, that Textainer's customer must have to use the container in their business. As of December 31, 2021, the fees for the decals were not yet paid to the vendor. Textainer leased the container, on the acquisition date, to Best Shipping Lines. The full term of the lease is exactly two years. Per the lease agreement, Best Shipping Lines will pay rent to Textainer in the amount of $200 per month during the first year of the lease and $100 per month during the second year of the lease. In addition, on January 1, 2021, Textainer paid $600 to Stellar Insurance to insure the container for exactly two years from the date of acquisition.

A. What is the proper entry to record the purchase of the container on January 1, 2021?

B. As of November 30, 2021, Textainer has recorded 11 months of depreciation. What is the proper entry to record the December 2021 depreciation, assuming the straight-line method is used? Get the instant assignment help.

C. If the container is sold on December 31, 2022 for $9,000 what is the Gain or Loss on Sale of the container that Textainer will recognize, assuming no selling and/or transaction costs?

Reference no: EM133921753

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