Chestnut City maintains its books so as to prepare fund accounting statements and prepares worksheet adjustments in order to prepare government-wide statements. As such, the Citys internal service fund is included in the proprietary funds statements.

Required:

Prepare necessary adjustments in order to incorporate the internal service fund in the government-wide statements as a part of governmental activities:

1. Balance sheet accounts of the internal service fund include: Cash, $252,000; Inventories, $315,000; Capital Assets, $1,134,000; Accumulated DepreciationCapital Assets, $486,000; Accounts Payable, $225,000; and Notes Payable, $360,000.
2. The only transaction in the internal service fund that is external to the government is interest expense in the amount of $10,800.
3. Exclusive of the interest expense, the internal service fund reported operating income of $109,800. An examination of the records indicates that services were provided as follows: one half to general government and one half to public safety.