P14.7 Financial Sta cial Statement Effects of Partnership Expansion Graham and Hyde currently share prot- LO is and losses in a 3:1 ratio and are considering admitting Ingalls as a new partner with a 20 percent in- terest 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. G/H G/H/ G/H/ G/H/ G/H/ #1 #2 #4 Cash and receivables......... $ 37,000 $ 37,000 $ 77,000 $ 77,000 $ 49,000 142,000 142,000 Other assets........ 142,000 222,000 150,000 $179,000 $179,000 Total assets $219,000 $299,000 $199,000 #3 Accounts payable...... Long-term debt ...... Capital-Graham ..... Capital-Hyde ......... Capital-Ingalls ......... Total liabilities and capital ..... $ 48,000 51,000 50,000 30,000 $ 48,000 51,000 40,000 24,000 16,000 $179.000 $ 48,000 51,000 62,000 34,000 24,000 $219,000 $ 48,000 51,000 110,000 50,000 40,000 $299,000 $ 48,000 51,000 50,000 30,000 20,000 $199,000 $179,000 Required a. As a user of financial statements in credit-granting or investment decisions, which of the above hal ance sheets look strongest? Discuss any red flags that whet your appetite for additional informati b. Explain whether Ingalls will likely prefer a particular alternative. Which one? c. Reconstruct the journal entries recording the four alternatives