A user incorrectly billed Sales Order as Cash Sale instead of Invoice and Cash Refund is already processed by Payment Gateway.
The Cash Sale cannot be deleted since it has been already processed by the Payment Gateway and the Payment Event will be floating.
Solution
Navigate to Transactions > Sales > Enter Sales Orders > List
Click View by the particular Sales Order
Click Close Order
Navigate to Transactions > Sales > Enter Sales Orders
Populate all fields with values from the original Sales Order
Click Billing tab
Click Payment subtab
Payment Method: Make sure there is no Payment Method selected
Click Save
Proceed with the Invoice creation.