The Tuck Shop began the current month with inventory costing $16,500, then purchased inventory at a cost of $42,500. The perpetual inventory system indicates that inventory costing $43,210 was sold during the month for $50,000. If an inventory count shows that inventory costing $14,000 is actually on hand at month-end, what amount of shrinkage occurred during the month?

1. $7,500
2. $15,790
3. $1,790
4. $13,995

Do not copy from Chegg and give complete answer with explanation