diff --git a/erpnext/manufacturing/doctype/production_plan/test_production_plan.py b/erpnext/manufacturing/doctype/production_plan/test_production_plan.py
index 07ded744d76..eefd577e9e6 100644
--- a/erpnext/manufacturing/doctype/production_plan/test_production_plan.py
+++ b/erpnext/manufacturing/doctype/production_plan/test_production_plan.py
@@ -884,9 +884,9 @@ class TestProductionPlan(IntegrationTestCase):
 		"""
 		from erpnext.manufacturing.doctype.work_order.test_work_order import make_wo_order_test_record
 
-		make_stock_entry(item_code="_Test Item", target="Work In Progress - _TC", qty=2, basic_rate=100)
+		make_stock_entry(item_code="_Test Item", target="_Test Warehouse - _TC", qty=2, basic_rate=100)
 		make_stock_entry(
-			item_code="_Test Item Home Desktop 100", target="Work In Progress - _TC", qty=4, basic_rate=100
+			item_code="_Test Item Home Desktop 100", target="_Test Warehouse - _TC", qty=4, basic_rate=100
 		)
 
 		item = "_Test FG Item"
@@ -934,10 +934,10 @@ class TestProductionPlan(IntegrationTestCase):
 		from erpnext.manufacturing.doctype.work_order.test_work_order import make_wo_order_test_record
 
 		make_stock_entry(
-			item_code="Raw Material Item 1", target="Work In Progress - _TC", qty=2, basic_rate=100
+			item_code="Raw Material Item 1", target="_Test Warehouse - _TC", qty=2, basic_rate=100
 		)
 		make_stock_entry(
-			item_code="Raw Material Item 2", target="Work In Progress - _TC", qty=2, basic_rate=100
+			item_code="Raw Material Item 2", target="_Test Warehouse - _TC", qty=2, basic_rate=100
 		)
 
 		pln = create_production_plan(item_code="Test Production Item 1", skip_getting_mr_items=True)
diff --git a/erpnext/manufacturing/doctype/work_order/test_work_order.py b/erpnext/manufacturing/doctype/work_order/test_work_order.py
index e1927747538..ced5dc86869 100644
--- a/erpnext/manufacturing/doctype/work_order/test_work_order.py
+++ b/erpnext/manufacturing/doctype/work_order/test_work_order.py
@@ -724,7 +724,12 @@ class TestWorkOrder(IntegrationTestCase):
 				self.assertEqual(row.item_code, fg_item)
 
 		work_order = make_wo_order_test_record(
-			item=fg_item, skip_transfer=True, planned_start_date=now(), qty=30, do_not_save=True
+			item=fg_item,
+			skip_transfer=True,
+			planned_start_date=now(),
+			qty=30,
+			do_not_save=True,
+			source_warehouse="_Test Warehouse - _TC",
 		)
 		work_order.batch_size = 10
 		work_order.insert()
@@ -941,11 +946,13 @@ class TestWorkOrder(IntegrationTestCase):
 			wip_warehouse=wip_warehouse,
 			qty=qty,
 			skip_transfer=1,
+			source_warehouse=wip_warehouse,
 			stock_uom=fg_item_non_whole.stock_uom,
 		)
 
 		se = frappe.get_doc(make_stock_entry(wo.name, "Material Transfer for Manufacture", qty))
 		se.get("items")[0].s_warehouse = "Stores - _TC"
+		se.get("items")[0].t_warehouse = wip_warehouse
 		se.insert()
 		se.submit()
 
@@ -2061,6 +2068,7 @@ class TestWorkOrder(IntegrationTestCase):
 			bom_no=bom_doc.name,
 			qty=1,
 			skip_transfer=1,
+			source_warehouse="_Test Warehouse - _TC",
 		)
 
 		job_cards = frappe.get_all("Job Card", filters={"work_order": wo.name})
@@ -2467,6 +2475,37 @@ class TestWorkOrder(IntegrationTestCase):
 
 		frappe.db.set_single_value("Manufacturing Settings", "validate_components_quantities_per_bom", 0)
 
+	def test_wip_skip(self):
+		wo = make_wo_order_test_record(
+			item="_Test FG Item",
+			qty=10,
+			source_warehouse="_Test Warehouse - _TC",
+			wip_warehouse="Stores - _TC",
+		)
+		manufacture_entry = frappe.get_doc(make_stock_entry(wo.name, "Manufacture", 10))
+		self.assertEqual(manufacture_entry.items[0].s_warehouse, "Stores - _TC")
+
+		wo = make_wo_order_test_record(
+			item="_Test FG Item",
+			qty=10,
+			source_warehouse="_Test Warehouse - _TC",
+			wip_warehouse="Stores - _TC",
+			skip_transfer=1,
+		)
+		manufacture_entry = frappe.get_doc(make_stock_entry(wo.name, "Manufacture", 10))
+		self.assertEqual(manufacture_entry.items[0].s_warehouse, "_Test Warehouse - _TC")
+
+		wo = make_wo_order_test_record(
+			item="_Test FG Item",
+			qty=10,
+			source_warehouse="_Test Warehouse - _TC",
+			wip_warehouse="Stores - _TC",
+			skip_transfer=1,
+			from_wip_warehouse=1,
+		)
+		manufacture_entry = frappe.get_doc(make_stock_entry(wo.name, "Manufacture", 10))
+		self.assertEqual(manufacture_entry.items[0].s_warehouse, "Stores - _TC")
+
 
 def make_operation(**kwargs):
 	kwargs = frappe._dict(kwargs)
diff --git a/erpnext/manufacturing/doctype/work_order/work_order.py b/erpnext/manufacturing/doctype/work_order/work_order.py
index 7b5d796e50d..72e16ed27d4 100644
--- a/erpnext/manufacturing/doctype/work_order/work_order.py
+++ b/erpnext/manufacturing/doctype/work_order/work_order.py
@@ -170,6 +170,7 @@ class WorkOrder(Document):
 		self.validate_sales_order()
 		self.set_default_warehouse()
 		self.validate_warehouse_belongs_to_company()
+		self.check_wip_warehouse_skip()
 		self.calculate_operating_cost()
 		self.validate_qty()
 		self.validate_transfer_against()
@@ -269,6 +270,10 @@ class WorkOrder(Document):
 		if not self.fg_warehouse:
 			self.fg_warehouse = frappe.db.get_single_value("Manufacturing Settings", "default_fg_warehouse")
 
+	def check_wip_warehouse_skip(self):
+		if self.skip_transfer and not self.from_wip_warehouse:
+			self.wip_warehouse = None
+
 	def validate_warehouse_belongs_to_company(self):
 		warehouses = [self.fg_warehouse, self.wip_warehouse]
 		for d in self.get("required_items"):
@@ -1460,7 +1465,11 @@ def make_stock_entry(work_order_id, purpose, qty=None, target_warehouse=None):
 		stock_entry.to_warehouse = wip_warehouse
 		stock_entry.project = work_order.project
 	else:
-		stock_entry.from_warehouse = wip_warehouse
+		stock_entry.from_warehouse = (
+			work_order.source_warehouse
+			if work_order.skip_transfer and not work_order.from_wip_warehouse
+			else wip_warehouse
+		)
 		stock_entry.to_warehouse = work_order.fg_warehouse
 		stock_entry.project = work_order.project
 
diff --git a/erpnext/selling/doctype/sales_order/test_sales_order.py b/erpnext/selling/doctype/sales_order/test_sales_order.py
index fc15f115056..d2ed31fc350 100644
--- a/erpnext/selling/doctype/sales_order/test_sales_order.py
+++ b/erpnext/selling/doctype/sales_order/test_sales_order.py
@@ -1712,13 +1712,13 @@ class TestSalesOrder(AccountsTestMixin, IntegrationTestCase):
 		wo.submit()
 		make_stock_entry(
 			item_code="_Test Item",
-			target="Work In Progress - _TC",
+			target="_Test Warehouse - _TC",
 			qty=4,
 			basic_rate=100,  # Stock RM
 		)
 		make_stock_entry(
 			item_code="_Test Item Home Desktop 100",  # Stock RM
-			target="Work In Progress - _TC",
+			target="_Test Warehouse - _TC",
 			qty=4,
 			basic_rate=100,
 		)