- 11 -
and they were responding to the return of merchandise from
customers. Wal-Mart's inventory was generally at its lowest
during the month of January.
Wal-Mart counted the inventory at some of its stores
during the last 3 weeks in January. The results of some of these
inventories were posted in January of the same taxable year,
while the results of most of these inventories were posted in
February of the subsequent taxable year. The ending inventory
for the year of the counts was not corrected for verified
shrinkage for those stores inventoried in January and posted in
February. The following chart shows the number of inventories
taken in January, the number of January inventories posted in
January, and the number of January inventories posted in
February for the taxable years at issue:
Number of
January Posted in Posted in
Year Inventories January February
1983 39 39 - 0 -
1984 73 9 64
1985 73 1 72
1986 93 or 95 - 0 - 93 or 95
During the subject years, the highest percentages of physical
inventories took place from March through September.
In general, it takes 4 to 6 weeks to prepare a store for
inventory. Forty-five days prior to a scheduled count,
Wal-Mart's internal audit department would send a preparation
package to the store for completion before the inventory was
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