Graham and Hyde currently share profits and losses in a 3: l ratio and are considering admitting Ingalls as a new partner with a 20 percent interest in capital and profits and losses. The different approaches to accounting for partnership expansion affect the financial statements of the new partnership. Condensed balance sheets for the Graham/Hyde partnership and the Graham/Hyde/Ingalls partnership under alternative admission approaches appear below.

Required
a. As a user of financial statements in credit-granting or investment decisions, which of the above balance sheets look strongest? Discuss any red flags that whet your appetite for additional information.
b. Explain whether Ingalls will likely prefer a particular alternative. Which one?
c. Reconstruct the journal entries recording the four alternatives.

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G/H G/H/ #2 G/H/ #4 #1 #3 Cash and receivableS...37,000 37,000 77,000 77,000 49,000 142,000 142,000 222000 150 Total assets .._...$179,000 $179,000 $219,000 $299,000 $199,000 51,000 62,000 34,000 24,000 51,000 110,000 50,000 40,000 51,000 50,000 30,000 20,000 Long-term debt ....51,000 50,000 Capital Graharn... Capital Hyde Capital Ingalls... 51,000 40,000 24,000 16,000 ...30,000 Total liabilitles and capital$179,000 $179,000 $219,000 $299,000 $199,000