To close a sales order you need to set all of the line items to zero quantities left to ship or on back order. Then, when you save it, so long as there is no dollar amount in the shipping pop up, the option to close the SO will be given.
 
Reopening a closed order is given as an option when you try to look at a closed order (if your SD-Q settings allow it).
 
Closing Work Orders is done with WO-J.

If you clear the outstanding amounts to "0," you can still add text lines within the SO to let you know what had originally been there. There is also a box at the lower left of the "front page" of the SO for SO notes where you could note the history. You can also make notes in the AR-A  and CM-A sections. The first two jog the memory on a single order. The AR-A / CM-A notes would let you know whether a customer has a history of placing big orders for price discounts, and then backing out of them. I don't know what your bookings concern is, perhaps crediting a salesperson with having done the legwork, even if the order fell through? You could create a "negative" SO for the same quantities and prices. The net effect would be a "0" number of parts and dollars, and would serve to take it out of the shipping/building stream. Just be sure to use a "notes" function someplace to help you remember why you did what you did. Hope this helps.

Thanks, thats what I needed to know.