The invoice you enter for the Notes Payable (N/P) payment gets coded to N/P and Interest Expense reducing the outstanding N/P balance. Your comments about the Accounts Payable (A/P) are irrelevant and tend to confuse the issue. The system will make the necessary entries to A/P when the payable is created and subsequently paid. Throw that out of your thought processes. When the petty cash advance is made, you should record the reduction of petty cash and offset that to a cash advance account. (I believe you can set this up as a receivable account and still code directly to it. Do not set up a credit A/R invoice, just code directly to this account just as you would any expense account.) When you create the credit A/P invoice, just record the credit to the same account you hit when you gave the owner the cash. At the end of the day you are left with a reduction of the N/P, recording of the interest expense, and a reduction of cash. T-accounts will give you a perfect picture of these transactions.
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