1. Go to Setup, Settings, Payroll, Linked Accounts, Incomes.
2. Make sure that an asset account is linked under Advances & Loans.
3. Create a paycheque for the employee.
4. Remove all incomes and deductions from the paycheque.
5. Confirm that the Gross Pay and Net Pay are both zero.
6. Go to the Income tab.
7. Enter the amount for the Advance or the Loan under the column 'This Period'.
8. Click Post.

DocLink: How to pay back a loan / advance?
DocLink: What is the difference between Advances and Loans?

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