Morrow Inc. uses the percentage of credit sales method of estimating doubtful accounts. The Allowance for Doubtful Accounts has an unadjusted credit balance of $3,900 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?

Multiple Choice

• $7,800.

• $10,000.

• $6,100.

• $13,900