Case study

Joe Blow entered the restaurant business many years ago and built up a successful operation in the city where he was owner and manager. Just recently he expanded to purchase a premise in the outer suburbs and delegated the management duties to his eldest son, Tim. Both restaurants have identical menus and pricing. Joe has been concerned about the turnover and profitability of the suburban restaurant. He has personally visited the venue many times and while it always appears busy, the figures do not paint the same story. Therefore, he has come to you for assistance. You are a forensic auditor and have accepted the engagement. Below are the comparative Profit and Loss statements and summarised Balance sheets for each venue for this year and last year.

Profit and Loss Statements Item- City- City- Suburban Suburban $000's