Our company’s owner paid loan to one of his friend. How and where to record the transaction
post the expense to his Capital account as Drawings.
later receive them as Funds contributed.
read this guide Set up and use capital accounts | Manager
The complete situation could be more complex than @sharpdrivetek described.
For example, did the friend make a loan to the business? If so, it should have been set up in a liability account. The payment would then be entered as a Spend money transaction, discharging all or part of the loan liability. If interest or fees were involved, the payment would be split between the loan and some expense account.
Or did the friend give a personal loan to the owner, who then invested that money in the business as though it were his own? In that case, everything would be done through a capital account or Owner’s equity, depending on the form of organization and design of the chart of accounts.
So, @usmanfromak, you need to furnish more details before a complete and accurate answer can be given.