How do I mark a book as lost if it is still listed under items?

F3, click special status—becomes brown, type in barcode and enter. Will give you several options. Click on lost. Go to patron's record and you will notice you can now click on the Account Balance . Click on it to view the patron's charges.

If the patron wants to pay for it, take the money, click on the book, and click the individual pay button on the bottom right.