Goran Tool Company records depreciation annually at the end of the year. Its policy is to take a full year’s depreciation on all assets used throughout the year, and depreciation for one-half a year on all machines acquired or disposed of during the year. The depreciation rate for the machinery is 10% applied on a straight-line basis, with no estimated scrap value.
The balance of the Machinery account at the beginning of 2008 was $172,300; the Accumulated Depreciation on Machinery account had a balance of $72,900. The following transactions affecting the machinery accounts took place during the year.
Jan. 15 Machine No. 38, which cost $9,600 when acquired June 3, 2001, was retired and sold as scrap metal for $600.
Feb. 27 Machine No. 81 was purchased. The fair market value of this machine was $12,500. It replaces Machines No. 12 and No. 27, which were traded in on the new machine. Machine No. 12 was acquired February 4, 1996, at a cost of $5,500 and is still carried in the accounts although fully depreciated and not in use. Machine No. 27 was acquired June 11, 2001, at a cost of $8,200. In addition to these two used machines, $9,000 was paid in cash. (Assume the exchange lacks commercial substance.)
Apr. 7 Machine No. 54 was equipped with electric control equipment at a cost of $940. This machine, originally equipped with simple hand controls, was purchased December 11, 2004, for $1,800. The new electric controls can be attached to any one of several machines in the shop.
12 Machine No. 24 was repaired at a cost of $720 after a fire caused by a short circuit in the wiring burned out the motor and damaged certain essential parts.
July 22 Machines No. 25, 26, and 41 are sold for $3,100 cash. The purchase dates and cost of these machines are:
No. 25 $4,000 May 8, 2000
No. 26 3,200 May 8, 2000
No. 41 2,800 June 1, 2002

Instructions
(a) Record each transaction in general journal entry form.
(b) Compute and record depreciation for the year. No machines now included in the balance of the account were acquired before January 1, 1999.