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Join nowMy new boss began purchasing the business from my previous boss last year and the previous boss is financing the purchase over 5 years.
I have recorded this as a long term liability in QB.
The opening balance for the loan was showing up in opening balance equity and I was told to transfer it to retained earnings but now retained earnings is negative.
Some say that is wrong and others say it will work itself out as the years go by and the various years of profit become larger than the amount financed.
Is this right or do I need to record the financed amount some other way?
There are monthly payments being made to the previous owner that include principle and interest. That's why it was put in as a loan so we can see it drop by the principle amount each month.