Before Adjustment,the Allowance for Doubtful Accounts Has a Credit Balance

Multiple Choice

Before adjustment,the allowance for doubtful accounts has a credit balance of $2,700.The company had $140,000 of net credit sales during the period and historically fails to collect 4% of credit sales.The company uses the percentage of credit sales method of estimating doubtful accounts.After adjusting for estimated bad debts,the new balance in the allowance for doubtful accounts account will be:

A) $8,300.
B) $5,400.
C) $2,900.
D) Cannot be determined from the information given.