Need pattern help - transferring from double-knitting to knitting in the round

I was considering trying to make some of these (Ravelry pattern) for stocking stuffers for Christmas but I am having trouble visualizing how to to make the transfer from double-knitting to knitting in the round.

I have never done double-knitting before but I reviewed a couple of videos and I think I understand the concept. DK in this pattern may be a little difficult because, if I understand the pattern correctly, I would be using the same colored yarn from two different balls to make the double-knit stitches instead of two different colors of yarn from two different balls as one usually does in DK but I think I can handle it.

My big concern/question is about how to move from the DK to the circular knitting. How exactly do you go from two strands/two balls of yarn (DK) to one strand/one ball of yarn (circular knitting)?

Also, I don’t have DPNs so I planned to use magic loop. Is that feasible?

Last question, in the DK instructions of the pattern, it says to “k1, sl1”. Do you slip knit-wise or purl-wise (cause normally this would be a purl stitch)?

You don’t even have to use 2 different balls, just 1 will work. I only ever learned double knit with one yarn in one color - CO an even number of sts and k1 sl 1 across every row. After a few rows you see that it makes a pouch.

This is what the pattern says -
Double knit for 6 rows (k1, sl1 across 12 times).
Transfer stitches to two dpn (I hold two dpn side by side in my right hand, grabbing the knit stitches with one needle and the slipped stitches with the other needle). Weave in the cast on end. Turn work right side out, pm for knitting in the round.

After you do 6 rows of k1 sl 1, put the slipped sts on one needle and the knit stitches on another, then begin to knit in the round and rearrange the sts so you can use all your needles.

Agreed, one ball of yarn is all you need. When you get to knitting in the round Magic loop should work as well as dpns although you may want to slip to dpns just to get alternate sts on different needles to start out with.
Slip purlwise.
Good idea for the stocking stuffers

That is so cute! I’d like to turn it into a can cozy! Now if only I can find the time!

Thanks for the link and everyone for the help, I’ll refer back here if I get stuck when I make mine! Jan, I think the can cozy is a great idea.