On December 3, Hakan Photography purchased inventory listed at $8,600 from Mark Photo Supply. Terms of the purchase were 3/10, n/20. Hakan Photography also purchased inventory from Erickson Wholesale on December 10 for a list price of $7,500. Terms of the purchase were 3/10, n/30. On December 16, Hakan paid both suppliers for these purchases. Hakan does not use a perpetual inventory system.

1. Give the entries to record the purchases and invoice payments assuming that (a) the net method is used and (b) the gross method is used.

2. Assume that Hakan has not paid either of the invoices at December 31. Give the yearend adjusting entry if the net method is used