In the reports, Letter Head is fetched from the Company master.
To have the company’s Letter Head fetched correctly in the report, please ensure that you have updated the default Letter Head in the Company master.
Explore > Accounting > Company
In a Company master, if no Letter Head is set as default, then in the reports, Letter Head having Default field checked will be fetched.
If you are managing multiple companies in a single account, then ensure that for each Company, default Letter Head is set in the Company master.
After updating Letter Head in the Company master, refresh your account, and then check the print format of a report.