I have a small business loan from a friend, when paying him back what account does the payment go under?

The loan was for $400 worth of start-up merchandise. I am paying him back and don't know if it is just a basic accounts payable, or if I should have it somewhere else because I still have the merchandise and want to show it as an et. I thought about cost-of-goods sold, but the merchandise is still on hand...please help!