Prepare journal entries for the following transactions for HO Train Shop applying the perpetual inventory system. Omit explanations.
Definitions:
Compounded Continuously
A method of calculating interest where the amount earned is constantly reinvested, leading to exponential growth over time.
Effective Annual Rate
The effective annual rate is the real return on an investment, taking into account the effect of compounding interest over a year.
Annual Rate
The interest rate charged per year on a loan, or earned on an investment, not accounting for the effect of compounding within that year.
Actual Rate
The real interest rate or return rate earned on an investment, as opposed to the nominal or advertised rate.
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