Can you write off outstanding Prior Year Accounts Payable Bills? A Vendor notified us in writing that we no longer owe them payment. Can we delete the A/P Bills?

It's nice to see you here in the forum, @dbrumfield. I'll be glad to help you write off the outstanding payable bills since you no longer owe the payment.

The best way to clear the bills that you no longer owe is to pay it off. Aside from making journal entries, this includes creating a clearing account. I'll provide the methods below, but to ensure the accuracy of your financial information, I also suggest speaking with your accountant.

Once you're ready, you can follow the steps below to create a journal entry for an Accounts Payable (A/P) balance:

1. Select + New icon.
2. Under Other, select Journal Entry.
3. Enter the Journal Date.
4. The Journal Date is the date of the end of the period.
5. On the first line, select the expense or liability account affected by the bill from the drop-down list in the Account column.
6. Enter the amount in the Credits column.
7. Input the reason for this journal entry in the Memo field.
8. On the second line, select Accounts Payable from the Accounts drop-down list. The amount should be automatically entered in the Debit column.
9. Choose the Vendor from the drop-down list in the Name column.
10. Click Save and Close.
    

Once done, you must set the Accounts Payable journal entry to reverse:

1. Select the Search icon on the Toolbar.
2. Locate the journal entry you created and select it to open it.
3. Select Reverse.
4. Change the Journal Date to one day after the original journal entry's Journal Date.
5. Select Save and Close.
   
   

For additional reference, you can check this article on how to resolve A/R or A/P balances on a cash basis Balance Sheet. 

I’m adding this resource where you can access our self-help articles: QuickBooks Online guide. These resources contain topics that will guide you in efficiently handling expenses workflow in QuickBooks.

If you have any additional questions concerning overseeing your customer transactions, you are always welcome to post again here. I'll be here as soon as I can. Have a good one and stay safe. 

@dbrumfield-entoe 

Ignore the advice given by @JoesemM, it's incorrect.

You can delete the bill if you're a cash basis taxpayer.  If you're accrual-based, create a credit memo (New > Vendor credit), use the same Category as the bill you want to "write off".  Then, apply the credit memo to the bill.  Avoid using a journal entry - a vendor credit does the same thing (debit A/P, credit category on credit memo) and it shows on most reports.