Pate Company acquired the assets (except cash) and assumed the liabilities of Some Company on January 1, 2020. In exchange for the net assets of Some, Pate gave its bonds payable with a maturity value of $2,000,000, a stated interest rate of 10% interest payable semiannually on June 30 and December 31, a maturity date of January 1, 2030, and a yield rate of 12%. Pate incurred $10,000 of bonds issue costs. Immediately prior to the acquisition, Some Company's balance sheet was as follows:

BOOK VALUE FAIR VALUE

Accounts receivable (net) $ 240,000 $ 220,000

Inventory 290,000 320,000

Land 960,000 1,508,000

Buildings (net) 1,020,000 1,392,000

Total $2,510,000

Accounts payable $ 270,000 $ 270,000

Note payable 600,000 600,000

Common stock, $5 par 420,000

Other contributed capital 640,000

Retained earnings 580,000

Total $2,510,000

The tax rate is 20%. Assume that book values of all account are equal to their tax bases. Pate Company agreed to pay Some Company's former stockholders $200,000 cash in 2021 if post- combination earnings of the combined company reached $1,000,000 during 2020.

Prepare the journal entry necessary for Pate Company in 2021 assuming the earnings contingency was not met