Answer:
The Journal entry is as follows:
On January 1, 2020
Bonds Payable A/c            Dr. $420,000
Premium on Bonds Payable A/c Dr. $12,600
         To Gain on Redemption of Bonds  $21,000
         To cash                        $411,600
(To record the re-acquisition of the bonds)
Working Notes:
Cash = $420,000 × 0.98
     = $411,600
