It will be noted that while this method shows net profits, it does not show how those profits were made. Having no accounts with purchases and sales, we can have no trading account to show gross profits, and without expense accounts there is no data from which to make up a detailed profit and loss statement. Herein is one of the shortcomings of the single entry method of bookkeeping. CLOSING THE BOOKS =10.= To close a single entry ledger, all that is necessary is to credit the proprietor's investment account, or any account representing capital, with the net gain, or debit the account with the net loss. Then rule the personal accounts and bring down the balances. EXERCISE On a certain date the assets and liabilities of David Henry are as follows: _Assets_ Cash $450.00 Due from sundry debtors 75.20 Merchandise per inventory 762.50 _Liabilities_ Due sundry creditors 144.00 The following transactions are recorded: Sales to sundry persons on account 44.71 Bought from sundry persons on account 337.54 Sold for cash 94.90 Received cash on account 62.00 Paid cash on account 132.50 Paid cash for rent 35.00 Paid cash for clerk hire 7.00 At the close of the period in which these transactions were recorded, the inventory of merchandise on hand was $987.75. _First._ Open single entry books, entering these transactions in the journal and cash book. _Second._ Post to ledger using the terms _Debtor_ and _Creditor_ to represent account of customers and those from whom goods were purchased. _Third._ Prove the ledger. _Fourth._ Make a statement of assets and liabilities. _Fifth_. Has there been a gain or a loss, and how does it affect the account of the proprietor? CHANGING TO DOUBLE ENTRY =11.= How to change the method of keeping a set of books from single to double entry is an important question to the bookkeeper, for he may be called upon any time to do the work. When once understood, the change involves only very simple entries. The routine may be briefly described as follows: _First._ Prepare a statement of assets and liabilities. _Second._ Enter this statement in the journal and post to the ledger, debiting all accounts which represent assets and crediting all accounts which represent liabilities. Credit proprietor's account with the difference, which is the present worth. If a new ledger is to be opened, new accounts will be opened for each form of asset or liability represented in the entry.