Brownsville Novelty Store Prepared the Following Budget Information for the Month

Brownsville Novelty Store prepared the following budget information for the month of May:

Sales are budgeted at $360,000. All sales are on account and a provision for bad debts is made for each month at three percent of sales for the month.
Inventory was $84,000 on April 30; an inventory increase of $12,000 is planned for May 31.
All inventory is marked to sell at cost plus 50 percent.
Estimated cash disbursements for selling and administrative expenses for the month are $48,000.
Depreciation for May is projected at $6,000.

Brownsville's budgeted bad debts expense for May is:

A) $7,200.
B) $10,800.
C) $7,560.
D) $5,400.
E) $14,400.