A company has a fiscal year-end of December 31: (1) on October 1, $15,000 was paid for a one-year fire insurance policy, (2) on June 30 the company lent its chief financial officer $13,000; principal and interest at 7% are due in one year, and (3) equipment costing $63,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $12,600 per year. If the adjusting entries were not recorded, would net income be higher or lower and by how much? higher lower