20.OmegaCompany has provided the following information prior to any year-end bad debt adjustment:

Cash sales are $150,000

Credit sales are $450,000

Accounts receivable (gross) are $110,000

Allowance for doubtful accounts balance is $1,200

Omega prepares an aging of accounts receivable and the result shows that 5% of gross accounts receivable is estimated to be uncollectible. What is the balance in the allowance for doubtful accounts after the bad debt expense is recorded?

A) $5,500

B) $6,700

C) $4,240

D) None of the above