The proof of the correctness of the work in Single Entry books does not consist in equal debits and credits, but in equal balances of Day Book and Ledger. All the sums in the debit column of the Day Book being posted to the Dr. side of the Ledger and all the sums in the Cr. column being posted to the Cr. side of the Ledger, it is evident that the difference between the debits and credits of one book must be equal to that of the other. As none of the accounts upon the Ledger had been closed at the time of taking off this Trial Balance, we make use of the totals for the purpose of showing that the footings of the two books must agree. These footings will not agree, however, after any of the accounts in the Ledger have once been closed; but instead of taking the totals as we have done here, the same proof would have been obtained had we used the balances only, and in business this is the better way.

To Ascertain the Loss or Gain.

After proving the Ledger as in the above Trial Balance, we next ascertain the gain or loss as stated in the General Rule, by taking an inventory, which we find as follows:

Closing the Single Entry Ledger.

After taking off the Trial Balance and ascertaining the Gain or Loss, the next step is that of closing. To do this an entry is made in the Day Book, crediting the partners with their respective shares of the Net Gain, or debiting them with their shares of the Net Loss. These entries are then posted to the Partners' accounts in the Ledger; the accounts are then balanced, and balances brought down to new accounts; when this is done the Ledger is closed, since closing is nothing more nor less than the determination of the balances of the Partners', Proprietors or Stock accounts. As the remaining accounts are all Personal, they are subject to the same principles as in Double Entry. From the above it is seen that it is just as easy and certain to determine the Loss or Gain in Single as in Double Entry.

Process of Changing.

From the Inventory taken as above, you get the results and effects of the business in Single Entry. To change to Double Entry is only to Debit the Assets to the Liabilities. (Note.-The difference will be the Net Cap., hence the partners are each credited in this opening entry with their new balances.)

If the Old Single Entry Ledger is to be Used.

If the old Ledger is to be used, the opening entry should not under any circumstances be any different than if a new one is to be opened. To use the old Ledger it will be necessary to post only the new accounts to be opened, while all the Personal Accounts are all ready in Double Entry condition, and are marked on the Journal "posted," as in the opening Journal entry below from the above

If a new Ledger is to be opened, you will have to Debit and Credit the Personal Accounts separately, instead of taking them collectively. Should there be a great number of Personal Accounts to transfer, it is far better to make the entry as above, and transfer from the old Ledger direct to the new. After posting the above entry in old Ledger, and transferring the Personal Accounts to new Ledger, take a Trial Balance; if correct, you are ready for business; if not, you must check your work at once and find the error. The operation of changing from Single Entry to Double Entry is so simple, and has been so thoroughly illustrated and explained, that further treatment would be useless.

Ex. 150. The following Trial Balance was taken from the books of Brown, Bingham & Jones. Losses and Gains shared equally. Show a statement of the Assets and Liabilities and the Loss and Gain account, properly closed.

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Ex. 151. Day & Co. have been doing business as partners, and have kept their books by Single Entry. They wish to admit J. D. Watterson as a partner, and have their books kept by Double Entry. From their books and Inventory they find the following Assets and Liabilities Mdse. per Inventory, $9241.00; Cash, $850.00; Real Estate, $3000.00; Bills Payable, $975.00; W. M. Day's credit, $5390.00; T. J. Simon's credit, $6400.00. They owe personal accounts, $4175.00. Persons owe them $6941.00. Store Fixtures, $571.00. What was the Gain or Loss? What is each partner's net capital? J. D. Watterson is admitted and invests $3000.00 cash, Mdse. $2000.00, Bills Receivable (guaranteed) $1500.00. Give a full solution for finding the Loss or Gain, admit the new partner and make the entry to open the books by Double Entry, and admit the partner by using one entry.

LIBRARY

OF THE
UNIVERSITY

CHAPTER FOUR.

Partnership Law.

Mercantile View of a Firm.

Partners are collectively called a firm. Merchants and Lawyers have different notions respecting the nature of a firm. Business men and Accountants are apt to look upon a firm in the light in which Lawyers look upon a corporation, i. e., as a body distinct from the members composing it, and having rights and obligations distinct from those of its members. Hence, in keeping partnership accounts the firm is made debtor to each partner, for what he brings into the common stock, and each partner is made debtor to the firm for all that he takes out of that stock. In the mercantile view, partners are never indebted to each other in respect to partnership transactions; but are always either debtors to, or creditors of the firm.

Owing to this impersonification of the firm, there is a tendency to regard its rights and obligations as unaffected by the introduction of a new partner, or by the death or retirement of an old one. Notwithstanding such changes among its members, the firm is considered as continuing the same; and the rights and obligations of the old firm are regarded as continuing in favor of, or against the new firm, as if no changes had occurred. The partners are the agents and sureties of the firm; its agents for the transaction of its business; its sureties for the liquidation of its liabilities so far as the assets of the firm are insufficient to meet them. The liabilities of the firm are not regarded as the liabilities of the partners, except in case they cannot be met by the firm and discharged out of its assets.

Legal View of a Firm.

Lawyers do not recognize a firm as distinct from the members comprising it. In taking partnership accounts and in administering partnership assets, courts have, to some extent, adopted the mercantile