Flynn Company uses a perpetual inventory system and reported $518,000 of inventory at the beginning of the month based on a physical count of inventory. During the month, the company bought $47,500 of inventory and sold inventory that had cost $33,750. At the end of the month, the physical count of inventory shows $530,000 on hand. How much shrinkage occurred during the month?

$32,000

$12,000

$35,500

$1,750