diff --git a/erpnext/accounts/doctype/payment_entry/test_payment_entry.py b/erpnext/accounts/doctype/payment_entry/test_payment_entry.py
index 355aa46ea05..f6c240c0714 100644
--- a/erpnext/accounts/doctype/payment_entry/test_payment_entry.py
+++ b/erpnext/accounts/doctype/payment_entry/test_payment_entry.py
@@ -1045,6 +1045,7 @@ class TestPaymentEntry(IntegrationTestCase):
 		)
 
 	def test_gl_of_multi_currency_payment_with_taxes(self):
+		frappe.db.set_single_value("Accounts Settings", "merge_similar_account_heads", 1)
 		payment_entry = create_payment_entry(
 			party="_Test Supplier USD", paid_to="_Test Payable USD - _TC", save=True
 		)
@@ -1606,6 +1607,96 @@ class TestPaymentEntry(IntegrationTestCase):
 		self.voucher_no = pe.name
 		self.check_gl_entries()
 
+	def test_payment_entry_merges_gl_entries_with_same_account_head(self):
+		"""
+		Test that Payment Entry merges GL entries with same account head
+		when 'Merge Similar Account Heads' setting is enabled.
+		"""
+		frappe.db.set_single_value("Accounts Settings", "merge_similar_account_heads", 1)
+
+		pe = create_payment_entry(
+			party_type="Supplier",
+			party="_Test Supplier",
+			paid_from="_Test Bank - _TC",
+			paid_to="Creditors - _TC",
+		)
+
+		pe.append(
+			"deductions",
+			{
+				"account": "Write Off - _TC",
+				"cost_center": "_Test Cost Center - _TC",
+				"amount": 50,
+			},
+		)
+
+		pe.append(
+			"deductions",
+			{
+				"account": "Write Off - _TC",
+				"cost_center": "_Test Cost Center - _TC",
+				"amount": 30,
+			},
+		)
+
+		pe.save()
+		pe.submit()
+
+		gl_entries = frappe.db.get_all(
+			"GL Entry",
+			filters={"voucher_no": pe.name, "account": "Write Off - _TC", "is_cancelled": 0},
+			fields=["debit", "credit"],
+		)
+
+		self.assertEqual(len(gl_entries), 1)
+		self.assertEqual(gl_entries[0].debit, 80)
+
+	def test_payment_entry_does_not_merge_gl_entries_when_setting_disabled(self):
+		"""
+		Test that Payment Entry does NOT merge GL entries
+		when 'Merge Similar Account Heads' is disabled.
+		"""
+
+		frappe.db.set_single_value("Accounts Settings", "merge_similar_account_heads", 0)
+
+		pe = create_payment_entry(
+			party_type="Supplier",
+			party="_Test Supplier",
+			paid_from="_Test Bank - _TC",
+			paid_to="Creditors - _TC",
+		)
+
+		pe.append(
+			"deductions",
+			{
+				"account": "Write Off - _TC",
+				"cost_center": "_Test Cost Center - _TC",
+				"amount": 50,
+			},
+		)
+
+		pe.append(
+			"deductions",
+			{
+				"account": "Write Off - _TC",
+				"cost_center": "_Test Cost Center - _TC",
+				"amount": 30,
+			},
+		)
+
+		pe.save()
+		pe.submit()
+
+		gl_entries = frappe.db.get_all(
+			"GL Entry",
+			filters={"voucher_no": pe.name, "account": "Write Off - _TC", "is_cancelled": 0},
+			fields=["debit", "credit"],
+		)
+
+		self.assertEqual(len(gl_entries), 2)
+
+		frappe.db.set_single_value("Accounts Settings", "merge_similar_account_heads", 1)
+
 	def check_pl_entries(self):
 		ple = frappe.qb.DocType("Payment Ledger Entry")
 		pl_entries = (
diff --git a/erpnext/stock/doctype/item_price/test_records.json b/erpnext/stock/doctype/item_price/test_records.json
deleted file mode 100644
index afe5ad65b75..00000000000
--- a/erpnext/stock/doctype/item_price/test_records.json
+++ /dev/null
@@ -1,56 +0,0 @@
-[
- {
-  "doctype": "Item Price",
-  "item_code": "_Test Item",
-  "price_list": "_Test Price List",
-  "price_list_rate": 100,
-  "valid_from": "2017-04-18",
-  "valid_upto": "2017-04-26"
- },
- {
-  "doctype": "Item Price",
-  "item_code": "_Test Item",
-  "price_list": "_Test Price List Rest of the World",
-  "price_list_rate": 10
- },
- {
-  "doctype": "Item Price",
-  "item_code": "_Test Item 2",
-  "price_list": "_Test Price List Rest of the World",
-  "price_list_rate": 20,
-  "valid_from": "2017-04-18",
-  "valid_upto": "2017-04-26",
-  "customer": "_Test Customer",
-  "uom": "_Test UOM"
- },
- {
-  "doctype": "Item Price",
-  "item_code": "_Test Item Home Desktop 100",
-  "price_list": "_Test Price List",
-  "price_list_rate": 1000,
-  "valid_from": "2017-04-10",
-  "valid_upto": "2017-04-17"
- },
- {
-  "doctype": "Item Price",
-  "item_code": "_Test Item Home Desktop Manufactured",
-  "price_list": "_Test Price List",
-  "price_list_rate": 1000,
-  "valid_from": "2017-04-10",
-  "valid_upto": "2017-04-17"
- },
- {
-  "doctype": "Item Price",
-  "item_code": "_Test Item",
-  "price_list": "_Test Buying Price List",
-  "price_list_rate": 100,
-  "supplier": "_Test Supplier"
- },
- {
-  "doctype": "Item Price",
-  "item_code": "_Test Item",
-  "price_list": "_Test Selling Price List",
-  "price_list_rate": 200,
-  "customer": "_Test Customer"
- }
-]