diff --git a/hrms/payroll/doctype/payroll_entry/payroll_entry.py b/hrms/payroll/doctype/payroll_entry/payroll_entry.py
index b2d0ee3ad3..fd35642683 100644
--- a/hrms/payroll/doctype/payroll_entry/payroll_entry.py
+++ b/hrms/payroll/doctype/payroll_entry/payroll_entry.py
@@ -865,7 +865,7 @@ def has_bank_entries(self) -> dict[str, bool]:
 			.on(je.name == jea.parent)
 			.select(je.name)
 			.where(
-				(je.voucher_type == "Bank Entry")
+				((je.voucher_type == "Bank Entry") | (je.voucher_type == "Cash Entry"))
 				& (jea.reference_name == self.name)
 				& (jea.reference_type == "Payroll Entry")
 			)
@@ -1098,7 +1098,9 @@ def set_accounting_entries_for_bank_entry(
 		return self.make_journal_entry(
 			accounts,
 			currencies,
-			voucher_type="Bank Entry",
+			voucher_type="Cash Entry"
+			if frappe.get_cached_value("Account", self.payment_account, "account_type") == "Cash"
+			else "Bank Entry",
 			user_remark=_("Payment of {0} from {1} to {2}").format(
 				_(user_remark), self.start_date, self.end_date
 			),
diff --git a/hrms/payroll/doctype/payroll_entry/test_payroll_entry.py b/hrms/payroll/doctype/payroll_entry/test_payroll_entry.py
index 1742a3e7cf..4d1849b376 100644
--- a/hrms/payroll/doctype/payroll_entry/test_payroll_entry.py
+++ b/hrms/payroll/doctype/payroll_entry/test_payroll_entry.py
@@ -129,7 +129,7 @@ def test_multi_currency_payroll_entry(self):
 				ifnull(sum(je.total_credit),0) as total_credit
 			from `tabJournal Entry` je, `tabJournal Entry Account` jea
 			where je.name = jea.parent
-				and je.voucher_type = 'Bank Entry'
+				and (je.voucher_type = 'Bank Entry' or je.voucher_type = 'Cash Entry')
 				and jea.reference_name = %s
 			""",
 			payroll_entry.name,
@@ -797,7 +797,7 @@ def run_test_for_loan_repayment_from_salary(self):
 			SELECT je.total_debit, je.total_credit
 			FROM `tabJournal Entry` je
 			INNER JOIN `tabJournal Entry Account` jea ON je.name = jea.parent
-			WHERE je.voucher_type = 'Bank Entry' AND jea.reference_type = 'Payroll Entry' AND jea.reference_name = %s
+			WHERE (je.voucher_type = 'Bank Entry' or je.voucher_type = 'Cash Entry') AND jea.reference_type = 'Payroll Entry' AND jea.reference_name = %s
 			LIMIT 1
 			""",
 			payroll_entry.name,