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37. Edward Company purchased a bulldozer on JulyL,2003.for $120,000, and estimated the useful life of the bulldozer to be 60,000 hours of use, and a salvage value of $30,000. In 2003, they used the bulldozer for 12,000 hours, and in 2004, it was used for 16,000 hours before it was destroyed by a fire. The proceeds from the insurance company were $80,000. The journal entry to record the disposal of the bulldozer will include a: A) debit to loss on disposal of $7,000 B) credit to gain on disposal of $2,000 C) debit to loss on disposal of $2,000 D) debit to loss on disposal of $16,000 E) credit to gain on disposal of $16,000

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Value of Asset Salvage Value Asset to be depreciated 120000 30000 90000 No. of estimated hrs 60000 Depreciation Value per hr 1.5 Value of Asset Depreciation in Yr 1 (12000 hrs x 1.5) Depreciation in Yr 2 (16000 hrs x 1.5) Value of asset before fire accident (A) 120000 18000 24000 78000 Insurance Claim Received (B) 80000 Gain on Disposal of Asset (B A) 2000

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