Final answer:
To analyze and record the transaction of selling printer paper on account to a local business, Sam's Club should debit Accounts Receivable and credit Sales Revenue. The profit from the sale can be calculated by subtracting the cost from the selling price.
Step-by-step explanation:
The question is asking to analyze and record the transaction of selling printer paper on account to a local business by Sam's Club, a warehouse store of Wal-Mart. The selling price of the printer paper is $1,000, and the payment terms are 2/10, n/30. This means that the buyer can get a 2% discount if payment is made within 10 days, otherwise the full amount is due within 30 days.
Since the cost of the printer paper to Sam's Club was $700, we can calculate the profit by subtracting the cost from the selling price: $1,000 - $700 = $300.
To record this transaction in the books of Sam's Club, we would debit Accounts Receivable for $1,000 (representing the amount owed by the local business) and credit Sales Revenue for $1,000. If the local business pays within the discount period, we would debit Cash for the reduced amount and credit Accounts Receivable.