Melt 2 tablespoons of butter in a large saute pan over medium heat. Add the shallot and cook until tender, about 4 minutes. Add the mushrooms and cooked for about 7-8 minutes, or until tender. Stir in the sherry and cook for an additional 2 minutes.
Next, add the flour to the pan. Stir frequently, until the flour is golden, about 2 minutes and then slowly whisk in the chicken broth. Cook for about 6 minutes more until thickened and then remove from heat.