diff --git a/erpnext/accounts/doctype/payment_entry/payment_entry.py b/erpnext/accounts/doctype/payment_entry/payment_entry.py
index 2634972..448224b 100644
--- a/erpnext/accounts/doctype/payment_entry/payment_entry.py
+++ b/erpnext/accounts/doctype/payment_entry/payment_entry.py
@@ -1054,9 +1054,9 @@
 				item=self,
 			)
 
-			dr_or_cr = "credit" if self.payment_type == "Receive" else "debit"
-
 			for d in self.get("references"):
+				# re-defining dr_or_cr for every reference in order to avoid the last value affecting calculation of reverse
+				dr_or_cr = "credit" if self.payment_type == "Receive" else "debit"
 				cost_center = self.cost_center
 				if d.reference_doctype == "Sales Invoice" and not cost_center:
 					cost_center = frappe.db.get_value(d.reference_doctype, d.reference_name, "cost_center")
@@ -1072,7 +1072,7 @@
 					against_voucher_type = d.reference_doctype
 					against_voucher = d.reference_name
 
-				reverse_dr_or_cr, standalone_note = 0, 0
+				reverse_dr_or_cr = 0
 				if d.reference_doctype in ["Sales Invoice", "Purchase Invoice"]:
 					is_return = frappe.db.get_value(d.reference_doctype, d.reference_name, "is_return")
 					payable_party_types = get_party_types_from_account_type("Payable")
@@ -1098,6 +1098,7 @@
 				)
 				gl_entries.append(gle)
 
+			dr_or_cr = "credit" if self.payment_type == "Receive" else "debit"
 			if self.unallocated_amount:
 				exchange_rate = self.get_exchange_rate()
 				base_unallocated_amount = self.unallocated_amount * exchange_rate