What is the bad debts expense based on the following information?

Assume management calculates bad debts based on 7% of outstanding accounts receivable?

Assume the following at year end:

AFDA	$3,000 credit balance
Sales returns and allowances	$25,000
Accounts receivable	$140,000

a) 6800

b) 9800

c) 4200

d) 3000