Calculating the Average Total Assets and the Return on Assets The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows. Also, assume a tax rate of 47%. Somerville Company Income Statement For the Year Ended December 31, 20X2 Net sales Less: Cost of goods sold Gross margin Less: Operating expenses Operating income Less: Interest expense Income before taxes Less: Income taxes (47%)* Net income *Includes both state and federal taxes. Amount Percent $8,281,989 100.0% (5,383,293) 65.0 $2,898,696 35.0 (1,323,368) 16.0 $1,575,328 19.0 (50,000) 0.6 $1,525,328 18.4 (716,904) 8.6 $808,424 9.8