Prepare the journal entry on the 18th October for the above transaction if the business uses the accrual basis of accounting system.

To prepare the journal entry for the transaction on October 18th under the accrual basis of accounting, I'll follow the standard approaches:

1. Breakdown the Problem

   • Identify the accounts involved in the transaction.
   • Determine whether those accounts will be debited or credited.

2. Relevant Concepts

   • In accrual accounting, revenues and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.
   • Common accounts involved are "Accounts Receivable," "Revenue," "Accounts Payable," and "Expenses."

3. Analysis and Detail

   • Assume there was a transaction where a product was sold on October 18th, which resulted in revenue being earned but payment has not been received yet.
   • Identify the accounts:
     • Increase in "Accounts Receivable" (debit)
     • Increase in "Revenue" (credit)

4. Verify and Summarize

   • Ensure that total debits equal total credits in the journal entry.
   • Provide the journal entry in standard format.

Journal Entry

Final Answer

• The journal entry on October 18th would reflect an increase in Accounts Receivable and an increase in Revenue. The exact amounts ($XXX) should be replaced with the actual figures from the transaction.