Mountain State Ford Truck Sales, Inc., E.P. O'Meara, Tax Matters Person - Page 8




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          Computer Services Division, and since 1994 it has utilized ADP,             
          Inc., as its computer vendor.  In addition to advising Mountain             
          State Ford and other heavy truck dealers of changes in the prices           
          of its parts through the periodic distribution of updated price             
          catalogs, each manufacturer provided to the computer vendors, at            
          about the same times it distributed such catalogs, computer-ready           
          mediums, such as magnetic tapes (computerized price update                  
          tapes), which reflected such price changes.                                 
               Under its perpetual inventory recordkeeping system, Mountain           
          State Ford (1) added to its parts inventory the number of units             
          of each type of part that were delivered and returned to it and             
          (2) removed from its parts inventory the number of units of each            
          type of part that it sold.  When Mountain State Ford received the           
          parts that it had ordered from a manufacturer, it also received a           
          computer-ready medium, such as a magnetic tape (shipping tape),             
          and packing sheets (packing sheets) that included a packing slip.           
          The shipping tape reflected the part number of each type of part            
          and the number of units of each such type that the manufacturer             
          had shipped, or had intended to ship, to Mountain State Ford, but           
          did not contain any information showing the prices that the                 
          manufacturer charged Mountain State Ford for those parts.                   
          Mountain State Ford used the shipping tape to enter into its                
          perpetual inventory recordkeeping system the part number and the            
          number of units of each type of part that the manufacturer                  
          shipped, or intended to ship, to it.                                        



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