Ch. 15 Hmwk MC.15.01 BE.15.13A BE.15.15A BE.15.19A BE.15.22A BE.15.25B BE.15.26B BE.15.36B EX.15.51 EX.15.54 BE.15.20A BE.15.23A Hide or show questions Progress:11/12 items eBook Show Me HowCalculator Calculating the Average Common Stockholders' Equity and the Return on Stockholders' Equity The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows: Somerville Company Income Statement For the Year Ended December 31, 20X2 Amount Percent Net sales $8,281,989 100.0% Less: Cost of goods sold (5,383,293) 65.0 Gross margin $2,898,696 35.0 Less: Operating expenses (1,323,368) 16.0 Operating income $1,575,328 19.0 Less: Interest expense (50,000) 0.6 Income before taxes $1,525,328 18.4 Less: Income taxes (40%)* (610,131) 7.4 Net income $915,197 11.0 * Includes both state and federal taxes. Somerville Company Statement of Retained Earnings For the Year Ended December 31, 20X2 Balance, beginning of period $1,979,155 Net income 915,197 Total $2,894,352 Preferred dividends (80,000) Dividends to common stockholders (201,887) Balance, end of period $2,612,465 Somerville Company Comparative Balance Sheets At December 31, 20X1 and 20X2 20X1 20X2 Assets Current assets: Cash $2,875,000 $2,580,000 Marketable securities 800,000 700,000 Accounts receivable (net) 939,776 690,000 Inventories 490,000 260,000 Other 93,000 74,261 Total current assets $5,197,776 $4,304,261 Property and equipment: Land $1,575,000 $1,067,315 Building and equipment (net) 1,348,800 1,150,000 Total long-term assets $2,923,800 $2,217,315 Total assets $8,121,576 $6,521,576 Liabilities and Stockholders' Equity Current liabilities: Notes payable, short term $1,170,127 $ 543,641 Accounts payable 298,484 101,500 Current maturity of long-term debt 3,000 2,000 Accrued payables 200,000 57,780 Total current liabilities $1,671,611 $ 704,921 Long-term liabilities: Bonds payable, 10% 500,000 500,000 Total liabilities $2,171,611 $1,204,921 Stockholders' equity: Preferred stock, $25 par, 8% $1,000,000 $1,000,000 Common stock, $1.50 par 337,500 337,500 Additional paid-in capital* 2,000,000 2,000,000 Retained earnings 2,612,465 1,979,155 Total stockholders' equity $5,949,965 $5,316,655 Total liabilities and stockholders' equity $8,121,576 $6,521,576 * For common stock only. Required:

1. Calculate the average common stockholders' equity. $

2. Calculate the return on stockholders' equity. Round the answer to two decimal places. %