P Company acquired the assets (except cash) and assumed the liabilities of S Company on January 1, 2020, paying $2,600,000 cash. Immediately prior to the acquisition, S Company's balance sheet was as follows:

Book Value

Fair Value

Accounts receivable (net)	$ 240,000		$ 220,000
Inventory	290,000		120,000
Land	960,000		1,658,000
Buildings (net)	1,020,000		1,442,000
Total	$2,510,000		$3,440,000
Accounts payable	$ 270,000		$ 170,000
Note payable	600,000		700,000
Common stock, $5 par	420,000
Other contributed capital	640,000
Retained earnings	580,000
Total	$2,510,000

P Company agreed to pay S Company's former stockholders $300,000 cash in 2021 if post- combination earnings of the combined company reached $6,000,000 during 2020.

Required:

A. Prepare the journal entry necessary for P Company to record the acquisition on January 1, 2020. It is expected that the earnings target is likely to be met.

B. Prepare the journal entry necessary for P Company in 2021 assuming the earnings contingency was not met.