Refer to the information for Santiago Systems above. Assume a tax rate of 40%.

The income statement, statement of retained earnings, and balance sheet for Santiago Systems are as follows:

Santiago Systems
Statement of Retained Earnings
For the Year Ended December 31, 20X2
Balance, beginning of period..............................................$1,205,500
Net income.......................................................................422,070
Total...........................................................................$1,627,570
Preferred dividends............................................................(40,000)
Dividends to common stockholders........................................(150,000)
Balance, end of period......................................................$1,437,570

Required:
1. Calculate the average total assets.
2. Calculate the return on assets.

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Santiago Systems Income Statement For the Year Ended December 31,20X2 Percent 100.0% 65.0 35.0 21.3 13.7 mount Net salcs Less: Cost of goods sold Less: Operating expenses Less: Interest expense Gross margin Operating income Income before taxcs $ 5,345,000 (3.474,250) $1,870,750 (1,140,300 $ 730,450 27,000 $ 703,450 (281,380) $ 422,070 13.2 5.3 7.9 Less: Income taxes (40%)* Net income Santiago Systems Comparative Balance Sheets At December 31,20X1 and 20X2 20X1 20X2 Assets Current assets: Cash Marketable securitics Accounts receivable (net) Inventorics Other $1,900,000 350,000 625,000 230,000 50,000 $3,155,000 $2,100,000 400,000 675,000 240,000 50,000 $3,465,000 Total current assets Property and cquipment: Land Building and equipment (net) $900,000 1,240,800 $2,140,800 $5,295,800 $ 900,000 1,192,800 $2,092,800 $5,557,800 Total long-term asscts Total assets Liabilities and Stockholders' Equitv crm $ 247,300 S 256,230 Current maturity of long-term debt Total current liabilitics S640,300 Stockholders equity: Preferred stock, $25 par, 8% Common stock, $1.00 par 1,205,500 Total stockholders' equity Total liabilities and stockholders' equity