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which reflected a disallowance of shrinkage at retail for the
post-physical inventory periods in the amount of $57,621,019.
Target had sales for 1984 in the amount of $3,045,802,000.
During the periods between the dates of the physical inventories
of Target's stores and the end of 1984, Target's sales were
$2,370,786,576, or 77.8 percent of all sales for 1984.
III. Dayton's
A. Accounting Methods and Procedures
1. In General
Dayton's comprised 16 stores, and each store had in excess
of 400 departments. Dayton's maintained its inventory records by
department.
2. LIFO Retail Method
Petitioner elected to value the inventories of Dayton’s
using the LIFO Retail Method of inventory valuation pursuant to
section 1.471-8, Income Tax Regs. Pursuant to sections 1.472-
1(k) and 1.472-8(c), Income Tax Regs., petitioner elected to use
department store indexes prepared by BLS. Petitioner aggregated
the departments of Dayton's into 20 LIFO pools that corresponded
to merchandise groups as established by BLS.
3. Accrual Rate for Shrinkage
Dayton's accounted for its inventory shrinkage on the
accrual method, by department. Dayton's accrued shrinkage as a
percentage of sales using rates (accrual rates) that were set for
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