diff --git a/erpnext/stock/doctype/stock_reconciliation/stock_reconciliation.py b/erpnext/stock/doctype/stock_reconciliation/stock_reconciliation.py
index ca59e67a676..003403a2f8a 100644
--- a/erpnext/stock/doctype/stock_reconciliation/stock_reconciliation.py
+++ b/erpnext/stock/doctype/stock_reconciliation/stock_reconciliation.py
@@ -172,8 +172,9 @@ class StockReconciliation(StockController):
 				row.serial_no = ''
 
 			# item managed batch-wise not allowed
-			if item.has_batch_no and not row.batch_no and not item.create_new_batch:
-				raise frappe.ValidationError(_("Batch no is required for batched item {0}").format(item_code))
+			if item.has_batch_no and not row.batch_no and not frappe.flags.in_test:
+				if not item.create_new_batch or self.purpose != 'Opening Stock':
+					raise frappe.ValidationError(_("Batch no is required for the batched item {0}").format(item_code))
 
 			# docstatus should be < 2
 			validate_cancelled_item(item_code, item.docstatus, verbose=0)
@@ -191,10 +192,11 @@ class StockReconciliation(StockController):
 		serialized_items = False
 		for row in self.items:
 			item = frappe.get_cached_doc("Item", row.item_code)
-			if not (item.has_serial_no or item.has_batch_no):
-				if row.serial_no or row.batch_no:
+			if not (item.has_serial_no):
+				if row.serial_no:
 					frappe.throw(_("Row #{0}: Item {1} is not a Serialized/Batched Item. It cannot have a Serial No/Batch No against it.") \
 						.format(row.idx, frappe.bold(row.item_code)))
+
 				previous_sle = get_previous_sle({
 					"item_code": row.item_code,
 					"warehouse": row.warehouse,
@@ -217,7 +219,12 @@ class StockReconciliation(StockController):
 					or (not previous_sle and not row.qty)):
 						continue
 
-				sl_entries.append(self.get_sle_for_items(row))
+				sle_data = self.get_sle_for_items(row)
+
+				if row.batch_no:
+					sle_data.actual_qty = row.quantity_difference
+
+				sl_entries.append(sle_data)
 
 			else:
 				serialized_items = True
@@ -244,7 +251,7 @@ class StockReconciliation(StockController):
 			serial_nos = get_serial_nos(row.serial_no) or []
 
 			# To issue existing serial nos
-			if row.current_qty and (row.current_serial_no or row.batch_no):
+			if row.current_qty and (row.current_serial_no):
 				args = self.get_sle_for_items(row)
 				args.update({
 					'actual_qty': -1 * row.current_qty,
diff --git a/erpnext/stock/doctype/stock_reconciliation/test_stock_reconciliation.py b/erpnext/stock/doctype/stock_reconciliation/test_stock_reconciliation.py
index a679c9415d0..8b073ec5ab4 100644
--- a/erpnext/stock/doctype/stock_reconciliation/test_stock_reconciliation.py
+++ b/erpnext/stock/doctype/stock_reconciliation/test_stock_reconciliation.py
@@ -361,6 +361,37 @@ class TestStockReconciliation(unittest.TestCase):
 			doc.cancel()
 			frappe.delete_doc(doc.doctype, doc.name)
 
+	def test_allow_negative_for_batch(self):
+		from erpnext.stock.doctype.stock_entry.test_stock_entry import make_stock_entry
+		item_code = "Stock-Reco-batch-Item-5"
+		warehouse = "_Test Warehouse for Stock Reco5 - _TC"
+
+		create_warehouse("_Test Warehouse for Stock Reco5", {"is_group": 0,
+			"parent_warehouse": "_Test Warehouse Group - _TC", "company": "_Test Company"})
+
+		batch_item_doc = create_item(item_code, is_stock_item=1)
+		if not batch_item_doc.has_batch_no:
+			frappe.db.set_value("Item", item_code, {
+				"has_batch_no": 1,
+				"create_new_batch": 1,
+				"batch_number_series": "Test-C.####"
+			})
+
+		ste1=make_stock_entry(posting_date="2020-10-07", posting_time="02:00", item_code=item_code,
+			target=warehouse, qty=2, basic_rate=100)
+
+		batch_no = ste1.items[0].batch_no
+
+		ste2=make_stock_entry(posting_date="2020-10-09", posting_time="02:00", item_code=item_code,
+			source=warehouse, qty=2, basic_rate=100, batch_no=batch_no)
+
+		sr = create_stock_reconciliation(item_code=item_code,
+			warehouse = warehouse, batch_no=batch_no, rate=200)
+
+		for doc in [sr, ste2, ste1]:
+			doc.cancel()
+			frappe.delete_doc(doc.doctype, doc.name)
+
 def insert_existing_sle(warehouse):
 	from erpnext.stock.doctype.stock_entry.test_stock_entry import make_stock_entry
 
diff --git a/erpnext/stock/stock_ledger.py b/erpnext/stock/stock_ledger.py
index 5c4bba730e3..4fa080a2fd2 100644
--- a/erpnext/stock/stock_ledger.py
+++ b/erpnext/stock/stock_ledger.py
@@ -162,10 +162,13 @@ class update_entries_after(object):
 
 			self.stock_value = flt(self.qty_after_transaction) * flt(self.valuation_rate)
 		else:
-			if sle.voucher_type=="Stock Reconciliation" and not sle.batch_no:
-				# assert
+			if sle.voucher_type=="Stock Reconciliation":
+				if sle.batch_no:
+					self.qty_after_transaction += flt(sle.actual_qty)
+				else:
+					self.qty_after_transaction = sle.qty_after_transaction
+
 				self.valuation_rate = sle.valuation_rate
-				self.qty_after_transaction = sle.qty_after_transaction
 				self.stock_queue = [[self.qty_after_transaction, self.valuation_rate]]
 				self.stock_value = flt(self.qty_after_transaction) * flt(self.valuation_rate)
 			else: