Payment is canceled, but journal entry not reconciled

Hi Experts,

I have a payment as below, and you can see that it is cancelled.

[click here|http://www.flickr.com/photos/45736280@N07/4606067636/sizes/o/]

But when I run Statement or Aging Report or in the Account Balance window, I see that it is not reconciled. Why? Refer to below

[click here|http://www.flickr.com/photos/45736280@N07/4605453543/sizes/o/]

Version is SAP Business One 2005B PL40

Please help!

Warmest Regards,

Chinho