Note 10 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?

iii) 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 al 2004 the Company repurchased the following securities Principal Amount Amount (Guin Repurchesed S 37,848 124,926 15,227 5,000 10,000 Paid Debt 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 $36,853 (865) (4,314) (1.981) (715) 7,975 (1,895) 120,216 3,144 4,219 10.00011275 1.888 $193,682S(7,882) Total $203,001