Rite Aid Long Term Debt Case: f. Note IO reports that Rite Aid engaged in some open-market debt transactions during year ended February 28, 2004 (see the part of note 10 marked "Debt Repurchased"). i. Prepare the journal entry required to record the repurchase of these notes. ii. Why did Rite Aid not have to pay the face value to repurchase these notes on the open market? 111. Explain why Rite Aid recorded a gain on all of the repurchased notes except on the 12.5% note on which it recorded a loss?

RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) For the Years Ended February 28, 2004, March 1 2003 and March 2, 2002 (In thousands, except per share amounts) During fiscal 2004 the Company repurchased the following securities: Principal Amount Amount. (Gain) Debt Repurchased Belurchased Paid loss 6.0% fixed rate senior notes due 2005............ 7.125% notes due 2007............ 6.875% senior debentures due 2013............. 7.7% notes due 2027..... 6.875% fixed rate senior notes due 2028..... 12.5% senior secured notes due 2006. Total ... $ 37,848 124,926 15,227 5,000 10,000 10,000 $203,001 $ 36,853 120,216 13.144 4,219 7,975 112275 $193,682 $_(865) (4,314) (1.981) (715) (1,895) 12888 $(7,882) RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) For the Years Ended February 28, 2004, March 1 2003 and March 2, 2002 (In thousands, except per share amounts) During fiscal 2004 the Company repurchased the following securities: Principal Amount Amount. (Gain) Debt Repurchased Belurchased Paid loss 6.0% fixed rate senior notes due 2005............ 7.125% notes due 2007............ 6.875% senior debentures due 2013............. 7.7% notes due 2027..... 6.875% fixed rate senior notes due 2028..... 12.5% senior secured notes due 2006. Total ... $ 37,848 124,926 15,227 5,000 10,000 10,000 $203,001 $ 36,853 120,216 13.144 4,219 7,975 112275 $193,682 $_(865) (4,314) (1.981) (715) (1,895) 12888 $(7,882)