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Financial Statement Effects of Partnership Expansion Graham and Hyde currently share prof- its 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/1 #1 G/H/ #2 G/H/ #3 G/H/1 #4 Cash and receivables.... Other assets... Total assets $ 37,000 142,000 $179,000 $ 37,000 142,000 $179,000 $ 77,000 142,000 $219,000 $ 77,000 222,000 $299,000 $ 49,000 150,000 $199,000 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 a. Required As a user of financial statements in credit-granting or investment decisions, which of the above bal- ance 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

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