Create payment from directors loan for an expense

You may have difficulty entering a cheque against an invopice but with a different payee (director). In this situation I would skip the invoice and go directly to cheque writing (delete invoice). Cheque made out to director. 3 items on cheque.

1.expense

2.director contribution (cash in) equal to expense

3.director loan reduction equal to expense

2 will be negative, resulting in a debit, 3 will be positive (credit)

I have followed your suggestion:

open the register for the loan due in account and make a new transaction as a decrease, select the expense account, enter something in the memo block and save

What do I then have to do to to to offset it so that it doesn't double my net assets?

Here is my take,

Step 1: Enter the full invoice as you would to any vendor invoice ensuring you have all the supporting documents.

Step 2: Go to Pay Bills and clear the bill as if the business paid for it.

Step 3: Claim your money from the business by using the Transfer Funds functionality (see screenshot) to debit your  Directors Loan account. ( Dr Directors Loan account & Cr Cash at Bank Account). Description: Being a claim for a business expense paid for using a personal account.

This will clear it without any drama and all entries will be valid.

When you click on 'Make Deposits' on the dummy bank account, the Received From tab automatically points you to a vendor account and not an asset account.

Instead, I use the Transfer Funds function from the Director's Loan (cr) to the dummy clearing bank account (Dr) as shown below. This clears both the balances