To find the surface area of the rectangular prism, we need to find the area of each of its faces and then add them up. We can use a net to visualize the faces:
```
+-------+
/ /|
/ / |
+-------+ |
| | |
| | +
| | /
| |/
+-------+
```
The rectangular prism has two pairs of congruent faces (top/bottom and front/back) and a third pair of congruent faces (left/right).
The area of each of the top and bottom faces is 7 x 3 = 21 square inches.
The area of each of the front and back faces is 7 x 11 = 77 square inches.
The area of each of the left and right faces is 3 x 11 = 33 square inches.
Therefore, the total surface area is:
2(21) + 2(77) + 2(33) = 42 + 154 + 66 = 262 square inches.
So the answer is (D) 262 in.2.