diff --git a/erpnext/accounts/doctype/journal_entry/journal_entry.py b/erpnext/accounts/doctype/journal_entry/journal_entry.py
index 28869d8..08d7073 100644
--- a/erpnext/accounts/doctype/journal_entry/journal_entry.py
+++ b/erpnext/accounts/doctype/journal_entry/journal_entry.py
@@ -3,7 +3,7 @@
 
 from __future__ import unicode_literals
 import frappe, erpnext, json
-from frappe.utils import cstr, flt, fmt_money, formatdate, getdate, nowdate, cint
+from frappe.utils import cstr, flt, fmt_money, formatdate, getdate, nowdate, cint, get_link_to_form
 from frappe import msgprint, _, scrub
 from erpnext.controllers.accounts_controller import AccountsController
 from erpnext.accounts.utils import get_balance_on, get_account_currency
@@ -53,6 +53,20 @@
 		self.update_inter_company_jv()
 		self.update_invoice_discounting()
 
+	def on_cancel(self):
+		from erpnext.accounts.utils import unlink_ref_doc_from_payment_entries
+		from erpnext.hr.doctype.salary_slip.salary_slip import unlink_ref_doc_from_salary_slip
+		unlink_ref_doc_from_payment_entries(self)
+		unlink_ref_doc_from_salary_slip(self.name)
+		self.make_gl_entries(1)
+		self.update_advance_paid()
+		self.update_expense_claim()
+		self.update_loan()
+		self.unlink_advance_entry_reference()
+		self.unlink_asset_reference()
+		self.unlink_inter_company_jv()
+		self.unlink_asset_adjustment_entry()
+		self.update_invoice_discounting()
 
 	def get_title(self):
 		return self.pay_to_recd_from or self.accounts[0].account
@@ -83,31 +97,32 @@
 				"inter_company_journal_entry_reference", self.name)
 
 	def update_invoice_discounting(self):
-		invoice_discounting_list = [d.reference_name for d in self.accounts if d.reference_type=="Invoice Discounting"]
+		def _validate_invoice_discounting_status(inv_disc, id_status, expected_status, row_id):
+			id_link = get_link_to_form("Invoice Discounting", inv_disc)
+			if id_status != expected_status:
+				frappe.throw(_("Row #{0}: Status must be {1} for Invoice Discounting {2}").format(d.idx, expected_status, id_link))
+
+		invoice_discounting_list = list(set([d.reference_name for d in self.accounts if d.reference_type=="Invoice Discounting"]))
 		for inv_disc in invoice_discounting_list:
-			short_term_loan_account = frappe.db.get_value("Invoice Discounting", inv_disc, "short_term_loan")
+			short_term_loan_account, id_status = frappe.db.get_value("Invoice Discounting", inv_disc, ["short_term_loan", "status"])
 			for d in self.accounts:
 				if d.account == short_term_loan_account and d.reference_name == inv_disc:
-					if d.credit > 0:
-						status = "Disbursed"
-					elif d.debit > 0:
-						status = "Settled"
+					if self.docstatus == 1:
+						if d.credit > 0:
+							_validate_invoice_discounting_status(inv_disc, id_status, "Sanctioned", d.idx)
+							status = "Disbursed"
+						elif d.debit > 0:
+							_validate_invoice_discounting_status(inv_disc, id_status, "Disbursed", d.idx)
+							status = "Settled"
+					else:
+						if d.credit > 0:
+							_validate_invoice_discounting_status(inv_disc, id_status, "Disbursed", d.idx)
+							status = "Sanctioned"
+						elif d.debit > 0:
+							_validate_invoice_discounting_status(inv_disc, id_status, "Settled", d.idx)
+							status = "Disbursed"
 					frappe.db.set_value("Invoice Discounting", inv_disc, "status", status)
 
-	def on_cancel(self):
-		from erpnext.accounts.utils import unlink_ref_doc_from_payment_entries
-		from erpnext.hr.doctype.salary_slip.salary_slip import unlink_ref_doc_from_salary_slip
-		unlink_ref_doc_from_payment_entries(self)
-		unlink_ref_doc_from_salary_slip(self.name)
-		self.make_gl_entries(1)
-		self.update_advance_paid()
-		self.update_expense_claim()
-		self.update_loan()
-		self.unlink_advance_entry_reference()
-		self.unlink_asset_reference()
-		self.unlink_inter_company_jv()
-		self.unlink_asset_adjustment_entry()
-
 	def unlink_advance_entry_reference(self):
 		for d in self.get("accounts"):
 			if d.is_advance == "Yes" and d.reference_type in ("Sales Invoice", "Purchase Invoice"):