I have my business which owes another business but they also owe us moneys how do we cancel each other out in simply accounting what would the journal entry be?

Cr A/R and Dr A/P. I'll assume the amounts owed are different to illustrate:

Company A owes Company B $500. Company B owes Company A $600. Currently the books would show:

Company A
Receivable of 600.
Payable of $500.

Company B
Receivable of $500
Payable of $600

You agree to each adjust by the lower of the amounts owing, the $500. Each company credits A/R by $500 and debits A/P by $500.

The new result:

Company A
Receivable of $100

Company B
Payable of $100

You'll want to be sure your subsidiary accounts still match. One way is to use credit and debit memos to track this change. If your accounting system doesn't allow journal entries to the A/P and A/R without being out of balance with your detail, the memos are the way to go - sort of like creating "dummy" invoices. It also might be easier to just exchange checks unless there is cause to think the other company will not do so.