Morrow Inc. uses the percentage of credit sales method of estimating doubtful accounts. The Allowance for Doubtful Accounts has an unadjusted credit balance of $3900 and the company had $200,000 of net credit sales during the period. Morrow has experienced bad debt losses of 5% of credit sales in prior periods. After making the adjusting entry for estimated bad debts, what is the ending balance in the Allowance for Doubtful Accounts account?
A. $10,000.
B. $6100.
C. $13,900.
D. $7800.
Answer: C
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