Administrative Proceeding
                                                  File No. 3-9556



                              UNITED STATES OF AMERICA
                                     Before the
                         SECURITIES AND EXCHANGE COMMISSION


          SECURITIES EXCHANGE ACT OF 1934
          Release No. 39737 / March 10, 1998

          ACCOUNTING AND AUDITING ENFORCEMENT
          Release No. 1015 / March 10, 1998
          ______________________________
                                        |
          IN THE MATTER OF              | ORDER INSTITUTING PUBLIC
                                        | PROCEEDINGS PURSUANT TO
          JERRY STONE                   | SECTION 21C OF THE SECURITIES
          				| EXCHANGE ACT OF 1934, MAKING
          		RESPONDENT.	| FINDINGS AND IMPOSING A CEASE-		
				        | AND-DESIST ORDER
          ______________________________|


                                         I.

               The Securities and Exchange Commission (Commission) deems it
          appropriate and in the public interest that public administrative
          proceedings be instituted pursuant to Section 21C of the
          Securities Exchange Act of 1934 (Exchange Act) against Jerry
          Stone (Stone).

               In anticipation of the institution of these administrative
          proceedings, Stone has submitted an Offer of Settlement (Offer)
          which the Commission has determined to accept.  Solely for the
          purpose of these proceedings and any other proceedings brought by
          or on behalf of the Commission or in which the Commission is a
          party, and without admitting or denying the findings, except as
          to jurisdiction and the facts set forth in Paragraph II(A) below,
          which he admits, Stone consents to the entry of this Order, its
          findings and the imposition of sanctions as set forth below.

                ACCORDINGLY, IT IS ORDERED THAT proceedings pursuant to
          Section 21C of the Exchange Act be, and they hereby are,
          instituted.

                                         II.

               On the basis of this Order and the Offer submitted by Stone,
          the Commission finds that[1]:

               A.   At all times relevant hereto, Perry Drug Stores, Inc.
          (Perry) was a publicly traded company whose common stock was
          registered pursuant to Section 12(b) of the Exchange Act.  Jerry
          Stone (Stone), age 66, at all times relevant hereto, was Perry's
          Treasurer, Senior Vice-President, Chief Financial Officer (CFO)
          and Principal Financial and Accounting Officer.  Stone signed
          Perry's 1992 Form 10-K which was filed with the Commission
          pursuant to Section 13(a) of the Exchange Act.

               B.   During the fiscal year ended October 31, 1992 (fiscal
          year 1992), Perry changed its historical inventory accounting
          system from the "estimated gross profit method," commonly used by
          food and drug store chains, to the "specific item cost method."
          Concurrently, it began installation of a point-of-sale system
          throughout its 230 store chain to improve inventory management.
          During the second quarter of fiscal year 1992, Perry's customary
          cycle inventory counts at small groups of stores disclosed
          apparent above-normal shrinkage in certain merchandise
          categories.  Shrinkage represents the difference between the
          physical inventory and the estimated inventory.  Under Stone's
          direction, Perry immediately began an internal investigation and
          subsequently consulted with retail accounting and risk management
          experts to determine the cause and whether such shrinkage did, in
          fact, exist.

               C.   Pending completion of the investigation and receipt of
          further information which would hopefully reconcile the apparent
          discrepancies, Perry deferred the adjustment and placed it in a
          temporary suspense account called the "Store 100" inventory
          account.  By the end of fiscal year 1992, the assigned value of
          the unverified inventory placed into the Store 100 account was
          approximately $20 million, which approximated 14% of total
          inventory at the end of fiscal 1992.  As the investigation
          progressed, Perry eliminated system failure, fraud and theft as
          reasons for the problem.  However, it was unable to determine any
          reason for the apparent substantial shrink.  If Perry had
          determined to make an adjustment at that time, it would have
          reported a negative net income of close to $6 million for fiscal
          1992.  Perry's financial statements filed with its 1992 Form 10-K
          did not accurately reflect the value of Perry's inventory at that
          time because it included, as an asset, the unverified inventory.
          Stone, as Perry's CFO, signed the Form 10-K filed with the
          Commission.

               D.   In early fiscal 1993, Perry continued to investigate
          and validate its internal systems and, upon the recommendation of
          its independent auditors, scheduled a full chain-wide physical
          inventory of all stores to obtain confirmation and a
          quantification of the apparent inventory shrinkage.  Pending
          completion and reconciliation of this physical inventory, Perry
          began to write off a portion of the inventory shortage each
          quarter throughout the year.  Upon completion and reconciliation
          of the chain-wide physical inventory, the amount of the shortage
          was confirmed and Perry wrote off the amount of the unverified
          shortage.

               E.   As discussed above, by signing Perry's 1992 Form 10-K,
          Stone caused Perry to file with the Commission financial
          statements which did not accurately reflect the value of Perry's
          inventory in violation of Section 13(a) of the Exchange Act which
          requires every issuer of a security registered pursuant to
          Section 12 of the Exchange Act to file with the Commission such
          information and documents (and copies thereof) as the Commission
          shall require to keep reasonably current the information and
          documents required to be included in or with the registration
          statement filed pursuant to Section 12, and such annual reports
          (and such copies thereof), certified if required by the rules and
          regulations of the Commission by independent certified public
          accountants, and such quarterly reports (and such copies
          thereof), as the Commission may prescribe and every issuer of a
          security registered on a national securities exchange is also
          required to file a duplicate original of such information,
          documents, and reports with the exchange.

               F.   As discussed above, by signing Perry's 1992 Form 10-K,
          Stone caused Perry to file with the Commission financial
          statements which did not accurately reflect the value of Perry's
          inventory in violation of Rule 13a-1 promulgated under the
          Exchange Act which requires every issuer of a security registered
          pursuant to Section 12 of the Exchange Act to file an annual
          report on the appropriate form authorized or prescribed therefor
          for each fiscal year after the last full fiscal year for which
          financial statements were filed in its registration statement and
          which requires registrants on Form 8-B to file annual reports for
          each fiscal year beginning on or after the date as of which the
          succession occurred and which requires annual reports to be filed
          within the period specified in the appropriate report form.

               G.   As discussed above, by signing Perry's 1992 Form 10-K,
          Stone caused Perry to file with the Commission financial
          statements which did not accurately reflect the value of Perry's
          inventory in violation of Rule 12b-20 promulgated under the
          Exchange Act which requires every issuer of a security registered
          pursuant to Section 12 of the Exchange Act to file such further
          material information, if any, as may be necessary to make the
          required statements, in light of the circumstances under which
          they are made not misleading.

               H.   By engaging in the conduct described above, Stone
          caused Perry's books and records to inaccurately reflect the
          assets of the company in violation of Section 13(b)(2)(A) of the
          Exchange Act which requires every issuer which has a class of
          securities registered pursuant to Section 12 of the Exchange Act
          to file reports pursuant to Section 15(d) of the Exchange Act and
          to make and keep books, records, and accounts which, in
          reasonable detail, accurately reflect the transactions and
          dispositions of the assets of the issuer.

                                        III.

               In view of the foregoing, it is in the public interest to
          impose sanctions specified in the Offer of Settlement.[2]

                ACCORDINGLY, IT IS ORDERED:

               Pursuant to Section 21C of the Exchange Act, that Stone
          cease and desist from causing any violation and any future
          violation of Section 13(a) of the Exchange Act and Rules 13a-1
          and 12b-20 promulgated thereunder and Section 13(b)(2)(A) of the
          Exchange Act.

               By the Commission.





                                                  Jonathan G. Katz
                                                  Secretary

          **FOOTNOTES**

          [1]: The findings herein are made pursuant to Stone's Offer of
          Settlement and are not binding on any other person or entity in
          this or any other proceeding.

          [2]: In determining to accept the Offer, the Commission
          considered the cooperation the Respondent afforded the Commission
          Staff.