@RebeccaTiffany 

In thinking about this issue some more, the issue is that the invoice has $10K in income and $1K in a balance sheet asset account.  Therefore, in order to keep your balance sheet balanced, QB has to book $10K in income (equity) to equal the $1K retainage (asset) and the $9K cash (asset) in order to keep things balanced.  Assets = Liabilities + Equity (10 = 0 + 10). 

So you have a couple options: 

1) Put the retainage on a separate invoice.    

2) You can assign an income account to the retainage item.  That way, the retainage item will reduce your income by $1K (with a separate negative Retainage Receivable line item on your P&L) instead of booking it to an asset account on the balance sheet.  In the video I sent, the guy mentions that the default account on the Retainage Receivable item (in QB Desktop for Contractors) is an income account and he didn't understand why.  I think this is why.  You need your retainage item to reduce your income.  Then, when you receive the retainage, book that to Retainage Receivable and it will remove the negative income on the P&L.