I have a client who purchases Home Mortgage Loans.  He himself has Loans he used used to purchase these Loans.  The interest rate charged the clients is higher than the interest rate he pays for purchase of these loans.  This Business has been going on for awhile as a partnership and it was dissolved.  

My problem is when i picked up the account.   The Customer's Loan balance is higher than the Loan balance of my client.  Of course because of the larger principal payment for my client.

Question:

Where do I post the Difference between the balances?

I  post the Customer's Loan Balance to Accounts Receivable, where I apply the principal paid each month.

I the Client's Loan Balance to Accounts Payable, where I apply the Principal Paid each month.