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  APPLIANCE
  RECYCLING CENTERS OF AMERICA, INC.

  7400 Excelsior
  Blvd. Minneapolis, MN 55426-4517

  TELEPHONE: (952)
  930-9000                          FACSIMILE:
  (952) 930-1800

March 21, 2008

Mr. Michael
Moran

Accounting
Branch Chief

Securities
and Exchange Commission

Mail
Stop 3561

Washington,
DC  20549

Re:  Appliance Recycling Centers of America, Inc.

       Comment Letter dated January 17,
2008

       Form 10-K for Fiscal Year Ended December 30,
2006

       File No. 000-19621

Dear
Mr. Moran:

We
have received your comment letter dated January 17, 2008, with respect to
the above-referenced filing by Appliance Recycling Centers of America, Inc.

As
requested, we are providing the following responses and supplemental
information.  To facilitate your review
of our responses, we have set forth below the full text of each comment,
followed by our response thereto.

Segment Information, page 41

1.  We note your
response to comment 12 in our letter dated November 21, 2007 and we
reissue our comment.  Please provide a
reply that responds to the entire comment including each bullet item.  Also provide us eith all of the financial
information available to the CODM and the most recent copy of your
organizational chart including employee names and titles.

Response:  Through 2005, the company was managed as a
single unit by the CEO who is the CODM.
We did not allocate corporate overhead or the administrative costs of
each individual center to either recycling or retail activities.  In 2006, the company began the process of
allocating these costs to match the two main sources of revenue and the process
has been refined in the last year.  We
also saw a negative trend in the percentage of total revenues that were made up
of recycling activities that led management to operate and evaluate the company
as a single unit.  That changed in 2007
with the addition of several new recycling contracts.  We also have reviewed the Commission’s
Rulemaking Release 33-8876, Smaller Reporting Company Regulatory Relief and
Simplification, and anticipate presenting only the current and

prior
income statement, cash flow and statement of changes in stockholders equity in
filing our 2007 financial statements on Form 10-K. Based on these new
facts, the company is planning to report the results of our two main operating
segments prospectively in our 2007 10-K filing.
We will present segment information for both 2006 and 2007 for our
retail and recycling operations and present the quarterly results prospectively
in our 2008 10-Q filings.  Since
byproduct revenue is generated primarily from recycling activities, it will be
considered part of the recycling segment and reported as such.  The individual bulleted items from the
original comment are addressed in the following paragraphs.

The
environmental regulations that exist pertaining to our recycling activity also
apply to product we receive as part of our haul-away and recycle services
offered to our retail customers and in the recycling of product that does not
meet our standards for sale.

There
is also some overlap in the customer base for each activity.  While the retail stores generally serve the
general public and the recycling activities generally serve electric utilities,
both types of customers generate by-product revenue. Through our outlet stores,
we are a reverse logistics partner with appliance manufacturers providing them
with a distribution channel for appliances that fall outside their normal
distribution and sales channels.

Due
to the multi-use nature of our facilities and resources, the company believes
it would be impractical and inaccurate to try to separate the activities of the
company into reportable segments prior to 2006, and therefore potentially
misleading to the users of our financial statements.

Note 4.  Accrued
Expenses, page 44

2.  We note your
response to comment 16 in our letter dated November 21, 2007.  Please clearly explain the operating
substance of the accrued incentive checks, the accounting principles applied
and important judgments made by management.
Please tell us how you account for the associated asset and why the
liability is classified as current even though it has not changed between the
balance sheet dates.  You should also
include a policy note that describes the applied accounting principles and how
they materially affect your financial position, cash flows, and results of
operations.  See paragraph 12 of APB 22.

Response:  The amount reported as accrued incentive
checks reflects uncashed incentive checks related to our various recycling
programs.  We recognize incentives
offered to our customers as a reduction of revenue in accordance with EITF
01-9, Accounting for Consideration Given by a Vendor to a
Customer (Including a Reseller of the Vendor’s Products). Our
accrued liability is adjusted as the incentive checks are presented for
payment, which is typically shortly after the issuance of the incentive rebate
check.  This balance reflects uncashed
checks that have become aged and will eventually become escheat property and
payable to the state in which the programs were administered.  Management reclassified them from cash to
accrued expenses after the checks went uncashed for at least three years.  We continue to monitor if any of these
payments have been presented for payment and would adjust the accrual
accordingly if paid.  Management feels
that classifying these as a liability rather than as a credit in our cash
accounts more accurately reflects these items as probable obligations to
pay.  The company is currently in the
process of accumulating the data necessary to turn these over to the various
states as unclaimed property and anticipates resolution on

many
of the older items in 2008.  The Company
believes that the rebate incentive checks offered to customers are consistent
with the definition of a current liability set forth in ARB 43, Chapter 3, para
7, whereby the current liability classification is intended to include
obligations that, by their terms are due on demand, even though liquidation may
not be expected within that period.

The
company will include a description of the accounting principles applied and the
effect of these items  prospectively
beginning with our 2007 10K filing.

In
connection with these responses, the Company hereby acknowledges that:

·                  The company is responsible for the adequacy
and accuracy of the disclosure in the filing;

·                  staff comments or changes to disclosure in
response to staff comments do not foreclose the Commission from taking any
action with respect to the filing; and

·                  the company may not assert staff comments as
a defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

Please
contact Patrick Winters at 952-930-1782 if you have any questions about these
responses.

Sincerely,

Appliance
Recycling Centers of America, Inc.

By

Controller/Primary
Accounting Officer