diff --git a/erpnext/accounts/doctype/payment_entry/payment_entry.py b/erpnext/accounts/doctype/payment_entry/payment_entry.py
index 0344e3de9f7..90109ea2118 100644
--- a/erpnext/accounts/doctype/payment_entry/payment_entry.py
+++ b/erpnext/accounts/doctype/payment_entry/payment_entry.py
@@ -1994,7 +1994,8 @@ def get_outstanding_on_journal_entry(name):
 		"END as outstanding_amount "
 		"FROM `tabGL Entry` WHERE (voucher_no=%s OR against_voucher=%s) "
 		"AND party_type IS NOT NULL "
-		'AND party_type != ""',
+		'AND party_type != ""'
+		"AND is_cancelled = 0",
 		(name, name),
 		as_dict=1,
 	)