diff --git a/erpnext/stock/doctype/stock_ledger_entry/test_stock_ledger_entry.py b/erpnext/stock/doctype/stock_ledger_entry/test_stock_ledger_entry.py
index 0ff773cd6e7..0491498b1b2 100644
--- a/erpnext/stock/doctype/stock_ledger_entry/test_stock_ledger_entry.py
+++ b/erpnext/stock/doctype/stock_ledger_entry/test_stock_ledger_entry.py
@@ -1344,6 +1344,47 @@ class TestStockLedgerEntry(ERPNextTestSuite, StockTestMixin):
 		# receipt2 now sits on a zero base -> 10 (not 0 from a double shift, nor a negative-stock error).
 		self.assertEqual(qty_after(receipt2), 10)
 
+	def test_cancel_shifts_same_timestamp_delivery_notes(self):
+		item = make_item().name
+		warehouse = "_Test Warehouse - _TC"
+		posting_date = today()
+		posting_time = "10:00:00"
+
+		make_stock_entry(
+			item_code=item,
+			to_warehouse=warehouse,
+			qty=100,
+			rate=10,
+			posting_date=posting_date,
+			posting_time="09:00:00",
+		)
+
+		dns = []
+		for i in range(5):
+			dns.append(
+				create_delivery_note(
+					item_code=item,
+					warehouse=warehouse,
+					qty=20,
+					rate=10 * i,
+					posting_date=posting_date,
+					posting_time=posting_time,
+				)
+			)
+			time.sleep(1)
+
+		dn = dns[2]
+		dn.cancel()
+
+		expected_qty_after_transaction_of_dns3 = 40
+		qty_after_transaction_of_dns3 = frappe.db.get_value(
+			"Stock Ledger Entry",
+			{"voucher_no": dns[3].name, "is_cancelled": 0},
+			"qty_after_transaction",
+		)
+
+		self.assertEqual(expected_qty_after_transaction_of_dns3, qty_after_transaction_of_dns3)
+
 	def test_get_next_stock_reco_respects_creation_order(self):
 		# A stock reco sharing the exact posting timestamp of the current entry must only count as the
 		# "next" reco when it was created after that entry. A reco created before it actually precedes
diff --git a/erpnext/stock/stock_ledger.py b/erpnext/stock/stock_ledger.py
index 7f6cc176373..23e99899068 100644
--- a/erpnext/stock/stock_ledger.py
+++ b/erpnext/stock/stock_ledger.py
@@ -497,7 +497,9 @@ class update_entries_after:
 
 		self.data = frappe._dict()
 
-		if not self.repost_doc or not self.args.get("item_wh_wise_last_posted_sle"):
+		if (not self.repost_doc or not self.args.get("item_wh_wise_last_posted_sle")) and not self.args.get(
+			"cancelled"
+		):
 			self.initialize_previous_data(self.args)
 
 		self.build()
@@ -805,10 +807,23 @@ class update_entries_after:
 
 	def process_sle_against_current_timestamp(self):
 		sl_entries = get_sle_against_current_voucher(self.args)
+		if self.args.get("cancelled") and sl_entries:
+			self.seed_previous_sle_for_cancellation(sl_entries[0])
 		for sle in sl_entries:
 			sle["timestamp"] = sle.posting_datetime
 			self.process_sle(sle)
 
+	def seed_previous_sle_for_cancellation(self, anchor_sle):
+		key = (anchor_sle.item_code, anchor_sle.warehouse)
+		if key in self.prev_sle_dict:
+			return
+
+		args = frappe._dict(anchor_sle)
+		args["sle_id"] = args.name
+		prev_sle = get_previous_sle_of_current_voucher(args)
+		if prev_sle:
+			self.prev_sle_dict[key] = prev_sle
+
 	def get_future_entries_to_fix(self):
 		# includes current entry!
 		args = self.data[self.args.warehouse].previous_sle or frappe._dict(