diff --git a/hrms/hr/doctype/leave_encashment/test_leave_encashment.py b/hrms/hr/doctype/leave_encashment/test_leave_encashment.py
index 1edb7b1b6e..e873c9b0bf 100644
--- a/hrms/hr/doctype/leave_encashment/test_leave_encashment.py
+++ b/hrms/hr/doctype/leave_encashment/test_leave_encashment.py
@@ -408,9 +408,13 @@ def test_status_of_leave_encashment_after_payment_via_salary_slip(self):
 		leave_encashment.reload()
 		self.assertEqual(leave_encashment.status, "Unpaid")
 
-	def test_status_of_leave_encashment_after_payment_via_payment_entry(self):
+	def test_status_of_leave_encashment_after_payment_via_payment_entry_and_fnf(self):
+		from hrms.hr.doctype.full_and_final_statement.test_full_and_final_statement import (
+			create_full_and_final_statement,
+		)
 		from hrms.overrides.employee_payment_entry import get_payment_entry_for_employee
 
+<<<<<<< HEAD
 		leave_encashment = frappe.get_doc(
 			doctype="Leave Encashment",
 			employee=self.employee,
@@ -421,6 +425,11 @@ def test_status_of_leave_encashment_after_payment_via_payment_entry(self):
 			expense_account="Administrative Expenses - _TC",
 			cost_center="Main - _TC",
 		).save()
+=======
+		leave_encashment = self.create_test_leave_encashment(
+			pay_via_payment_entry=1, payable_account="Payroll Payable - _TC"
+		)
+>>>>>>> 3589e049 (chore: add test)
 		leave_encashment.submit()
 
 		pe = get_payment_entry_for_employee(leave_encashment.doctype, leave_encashment.name)
@@ -430,5 +439,84 @@ def test_status_of_leave_encashment_after_payment_via_payment_entry(self):
 		pe.submit()
 
 		leave_encashment.reload()
+		self.assertEqual(leave_encashment.status, "Paid")
+<<<<<<< HEAD
+=======
+
+		pe.cancel()
+		leave_encashment.reload()
+		self.assertEqual(leave_encashment.status, "Unpaid")
+
+		frappe.db.set_value("Employee", self.employee, "relieving_date", getdate())
+
+		fnf = create_full_and_final_statement(self.employee)
+		fnf.payables = []
+		fnf.receivables = []
+		fnf.append(
+			"payables",
+			{
+				"component": "Leave Encashment",
+				"reference_document_type": "Leave Encashment",
+				"reference_document": leave_encashment.name,
+				"amount": leave_encashment.encashment_amount,
+				"account": leave_encashment.payable_account,
+				"status": "Settled",
+			},
+		)
+		fnf.submit()
+
+		jv = fnf.create_journal_entry()
+		jv.accounts[1].account = frappe.get_cached_value("Company", "_Test Company", "default_bank_account")
+		jv.cheque_no = "123456"
+		jv.cheque_date = getdate()
+		jv.save()
+		jv.submit()
 
+		leave_encashment.reload()
 		self.assertEqual(leave_encashment.status, "Paid")
+
+		jv.cancel()
+		leave_encashment.reload()
+		self.assertEqual(leave_encashment.status, "Unpaid")
+
+	def create_test_leave_encashment(self, **kwargs):
+		"""Helper method to create leave encashment with default values"""
+		args = {
+			"employee": self.employee,
+			"leave_type": "_Test Leave Type Encashment",
+			"leave_period": self.leave_period.name,
+			"encashment_date": self.leave_period.to_date,
+			"currency": "INR",
+		}
+		args.update(kwargs)
+		return create_leave_encashment(**args)
+
+
+def create_leave_encashment(**args):
+	if args:
+		args = frappe._dict(args)
+	leave_encashment = frappe.new_doc("Leave Encashment")
+	leave_encashment.company = args.company or "_Test Company"
+	leave_encashment.employee = args.employee
+	leave_encashment.posting_date = args.posting_date or getdate()
+	leave_encashment.leave_type = args.leave_type
+	leave_encashment.leave_period = args.leave_period
+	leave_encashment.encashment_date = args.encashment_date or getdate()
+	leave_encashment.currency = args.currency or frappe.get_cached_value(
+		"Company", "_Test Company", "default_currency"
+	)
+	leave_encashment.pay_via_payment_entry = args.pay_via_payment_entry or 0
+	if leave_encashment.pay_via_payment_entry:
+		leave_encashment.payable_account = args.payable_account or frappe.get_cached_value(
+			"Company", "_Test Company", "default_payable_account"
+		)
+		leave_encashment.expense_account = args.expense_account or "Administrative Expenses - _TC"
+		leave_encashment.cost_center = args.cost_center or "Main - _TC"
+
+	if args.encashment_days:
+		leave_encashment.encashment_days = args.encashment_days
+
+	leave_encashment.insert()
+
+	return leave_encashment
+>>>>>>> 3589e049 (chore: add test)