A company has a fiscal year-end of December 31: (1) on October 1, $29,000 was paid for a one-year fire insurance policy; (2) on June 30 the company advanced its chief financial officer $27,000; principal and interest at 5% on the note are due in one year, and (3) equipment costing $77,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $15,400 per year. If the adjusting entries were not recorded, would net income be higher or lower and by how much? Net income would be by