Just try this out...Just copy and paste it in your compiler

#include <c8051F120.h>

unsigned char temporary,temporary1;
sbit LED = P1^6;

void Init_Device(void);
void main (void)
{
Init_Device();
while (1)
{
temporary1 = temporary;
}

}
void serial_int(void) interrupt 4
{
if(RI1)
{ RI1 = 0; temporary = SBUF0;}
if(TI1)
TI1 = 0;
}

void Tmr0_Int (void) interrupt 1
{
static unsigned int count_sec = 0;
TR0 = 0;
TH0 = 0xF7;
TL0 = 0x00;
count_sec++;
if(count_sec > 5000)
{
LED = !LED;
SBUF1 = temporary;
count_sec = 0;
}
TR0 = 1;
}


// Peripheral specific initialization functions,
// Called from the Init_Device() function
void Reset_Sources_Init()
{
WDTCN = 0xDE;
WDTCN = 0xAD;
}

void Port_IO_Init()
{
// P0.0 - TX0 (UART0), Push-Pull, Digital
// P0.1 - RX0 (UART0), Open-Drain, Digital
// P0.2 - Unassigned, Open-Drain, Digital
// P0.3 - Unassigned, Open-Drain, Digital
// P0.4 - Unassigned, Open-Drain, Digital
// P0.5 - Unassigned, Open-Drain, Digital
// P0.6 - Unassigned, Open-Drain, Digital
// P0.7 - Unassigned, Open-Drain, Digital

// P1.0 - Unassigned, Open-Drain, Digital
// P1.1 - Unassigned, Open-Drain, Digital
// P1.2 - Unassigned, Open-Drain, Digital
// P1.3 - Unassigned, Open-Drain, Digital
// P1.4 - Unassigned, Open-Drain, Digital
// P1.5 - Unassigned, Open-Drain, Digital
// P1.6 - Unassigned, Push-Pull, Digital
// P1.7 - Unassigned, Open-Drain, Digital

// P2.0 - Unassigned, Open-Drain, Digital
// P2.1 - Unassigned, Open-Drain, Digital
// P2.2 - Unassigned, Open-Drain, Digital
// P2.3 - Unassigned, Open-Drain, Digital
// P2.4 - Unassigned, Open-Drain, Digital
// P2.5 - Unassigned, Open-Drain, Digital
// P2.6 - Unassigned, Open-Drain, Digital
// P2.7 - Unassigned, Open-Drain, Digital

// P3.0 - Unassigned, Open-Drain, Digital
// P3.1 - Unassigned, Open-Drain, Digital
// P3.2 - Unassigned, Open-Drain, Digital
// P3.3 - Unassigned, Open-Drain, Digital
// P3.4 - Unassigned, Open-Drain, Digital
// P3.5 - Unassigned, Open-Drain, Digital
// P3.6 - Unassigned, Open-Drain, Digital
// P3.7 - Unassigned, Open-Drain, Digital

SFRPAGE = CONFIG_PAGE;
P0MDOUT = 0x01;
P1MDOUT = 0x40;
XBR0 = 0x04;
XBR2 = 0x40;
}

void Oscillator_Init()
{
int i = 0;
SFRPAGE = CONFIG_PAGE;
SFRPAGE = LEGACY_PAGE;
FLSCL = 0xB0;
SFRPAGE = CONFIG_PAGE;
PLL0CN |= 0x01;
PLL0DIV = 0x01;
PLL0FLT = 0x01;
PLL0MUL = 0x04;
for (i = 0; i < 15; i++); // Wait 5us for initialization
PLL0CN |= 0x02;
while ((PLL0CN & 0x10) == 0);
CLKSEL = 0x02;
OSCICN = 0x83;
}

void Timer_Init()
{
SFRPAGE = TIMER01_PAGE;
TCON = 0x10;
TMOD = 0x01;
TH0 = 0xF7;
SFRPAGE = TMR2_PAGE;
TMR2CN = 0x04;
TMR2CF = 0x08;
RCAP2L = 0x82;
RCAP2H = 0xFD;
}

void UART_Init()
{
SFRPAGE = UART0_PAGE;
SCON0 = 0x50;
SSTA0 = 0x15;
}

void Interrupts_Init()
{
IE = 0x92;
}

// Initialization function for device,
// Call Init_Device() from your main program
void Init_Device(void)
{
Reset_Sources_Init();
Port_IO_Init();
Oscillator_Init();
Timer_Init();
UART_Init();
Interrupts_Init();
}