Chem-Lite, Inc., maintains its accounts on the basis of a fiscal year ending March 31. At March 31, 20X1, the Equipment account in the general ledger appeared as shown below. The company uses straight-line depreciation, a 10-year life, and 10 percent salvage value for all its equipment. It is the companys policy to take a full years depreciation on all additions to equipment occurring during the fiscal year, and you may treat this policy as a satisfactory one for the purpose of this problem. The company has recorded depreciation for the fiscal year ended March 31, 20X1.

Equipment 4/1/X0 Bal. forward 100,000

12/1/X0 10,500

1/2/X1 1,015

2/1/X1 1,015

3/1/X1 1,015

Upon further investigation, you find the following contract dated December 1, 20X0, covering the acquisition of equipment: List price $ 30,000 5% sales tax 1,500 Total $ 31,500 Down payment 10,500 Balance 21,000 8% interest, 24 months 3,360 Contract amount $ 24,360 Required: Prepare the adjusting entries you would propose as auditor of Chem-Lite, Inc., with respect to the equipment and related depreciation accounts at March 31, 20X1. (Assume that all amounts given are material.)