Independent Auditor's Report


The Board of Directors
Federated Department Stores, Inc.

The Board of Directors
Prime Receivables Corporation:

We have examined management's assertion, included in the
accompanying Management Report on the Effectiveness of the
Internal Accounting Control Structure over the Servicing of
Accounts Receivable, that as of August 3, 1996, Federated
Department Stores, Inc. and subsidiaries ("Federated"), as
Servicer under the Amended and Restated Pooling and Servicing
Agreement dated December 15, 1992, between Prime Receivables
Corporation ("Prime"), as Transferor, Federated, as Servicer, and
Chemical Bank, as Trustee, (the "Pooling and Servicing
Agreement") maintained an effective internal accounting control
structure over the servicing of accounts receivable of Prime.

Our examination was made in accordance with standards established
by the American Institute of Certified Public Accountants and,
accordingly, included obtaining an understanding of the internal
accounting control structure over the servicing of accounts
receivable, testing and evaluating the design and operating
effectiveness of the internal control structure, and such other
procedures as we considered necessary in the circumstances.  We
believe that our examination provides a reasonable basis for our
opinion.

Because of inherent limitations in any internal accounting
control structure, errors or irregularities may occur and may not
be detected.  Also, projections of any evaluation of the internal
accounting control structure over the servicing of accounts
receivable to future periods are subject to the risk that the
internal accounting control structure may become inadequate
because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

In our opinion, management's assertion that Federated maintained
an effective internal accounting control structure over the
servicing of accounts receivable of Prime as of August 3, 1996,
is fairly stated, in all material respects, based upon criteria
stated in the Pooling and Servicing Agreement.

This report is intended solely for the information and use of the
boards of directors and managements of Federated and Prime,
Investor Certificateholders, Chemical Bank, as Trustee, Moody's
Investor Services, Inc. and Standard and Poor's Corporation, as
the Rating Agencies, and should not be used for any other
purpose.


                              KPMG Peat Marwick LLP


November 1, 1996



Management Report on Effectiveness of Internal
Accounting Control Structure
Over the Servicing of Accounts Receivable

Management of Federated Department Stores, Inc., and subsidiaries
("Federated") is responsible for establishing and maintaining an
effective internal accounting control structure over the
servicing of accounts receivable of Prime Receivables Corporation
("Prime"), a wholly-owned subsidiary of Federated.  The structure
contains monitoring mechanisms, and actions are taken to correct
deficiencies identified.

There are inherent limitations in the effectiveness of any
internal accounting control structure, including the possibility
of human error and the circumvention or overriding of controls.
Accordingly, even an effective internal accounting control
structure can provide only reasonable assurance with respect to
the servicing of accounts receivable and the preparation of
reports relating to the servicing of accounts receivable as
required by the Amended and Restated Pooling and Servicing
Agreement dated December 15, 1992 between Prime, as Transferor,
Federated, as Servicer, and Chemical Bank, as Trustee (the
"Pooling and Servicing Agreement").  Further, because of changes
in conditions, the effectiveness of an internal accounting
control structure may vary over time.

Management assessed Federated's internal accounting control
structure over the servicing of accounts receivable of Prime as
of August 3, 1996.  This assessment was based on criteria for
effective internal accounting control over the servicing of
accounts receivable of Prime described in the Pooling and
Servicing Agreement.  Based on this assessment, management
believes that, as of August 3, 1996, Federated maintained an
effective internal accounting control structure over the
servicing of accounts receivable of Prime.

November 1, 1996


/s/ James J. Amann
James J. Amann, Chairman & CEO



/s/ William A. Lambert
William A. Lambert, Vice President - Finance