The interest invoice should not have had HST on it. However that is a moot point since that has already happened and is in previous year. Just create another entry for the interest invoice and enter as a credit using same account nbrs as before  Be sure to note in the item description that your are reversing the original invoice nbr dated such and such. As for the rest of the balance it sounds like a write off so what I usually do is to create an invoice using invoice nbr such as W/O@Dec31/13 and date it as current date. The account nbrs would be the 'bad Debt Expense' and the GST/HST/PST if applicable. The tax amounts will be proportional to write-off amount using the taxes that was initially used on original invoices. If there are several invoices involved and therefore a combination of taxes such as GST vs HST then the payments would be applied to the oldest invoices first. Then go by what is left to determine which GST or HST to use.

I no longer apply HST to interest invoices - what a wonderful resource the CRA website is if you take the time to peruse it.

I have done exactly what you have indicated to remove the bad debt's balance and its HST. Thank you once again for your direction, smithco.