More of the story line Michael Meets Martha's Family.
Look at that rectangular shape, and that cover, and those pontoons. This is more like a party barge than what I think of as a boat. Here’s a party barge for comparison:
Yesterday, Fred said that Michael was Martha’s boyfriend, now he is saying, “pretty good friends.” Any time we get a break in continuity, someone is setting up a bad joke and this is no exception.
Oh, Fred. This is not a dinghy. Lynn Johnston has become aware of the numerous jokes that have been made using the word “dinghy” when talking about boats and she has decided to join in.
Phil: Actually, I'm a lake person. It's very romantic. Harvey: Still. So your vessel accommodates a woman also? Phil: No. I've got a little dinghy
Old sailors never die, they just get a little dinghy.
"So, that's your dinghy?" she said, "I thought it would be bigger!"
And then there is my favorite, "Teeny Little Dinghy"" from SOMETHING'S AFOOT by James McDonald, Robert Gerlach & David Vas, music also by Ed Linderman.
Wrong, Martha. He was just talking about you and not about the boat. Your father has made a bad pun at your expense. Probably he has heard Michael is a Patterson and that’s all they understand. For the first time on this date, Michael smiles. I think the bad pun worked.
That said, this could have gone a different way in Panel 4:
Michael: Even if your dinghy is little, Mr. McRae, it was good enough to make Martha. That’s what counts, not size.
Michael: Speak for yourself, Mr. McRae. My dinghy is quite large as Martha can tell you.
Michael: What do you mean when you say, “our little dinghy?”
Another in a long line of bad, dinghy jokes, or is that dinghy, bad jokes?