A company has a fiscal year-end of December 31: (1) on October 1, $36,000 was paid for a one-year fire insurance policy; (2) on June 30 the company advanced its chief financial officer $30,000; principal and interest at 8% on the note are due in one year; and (3) equipment costing $80,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $12,000 per year. If the adjusting entries were not recorded, would net income be higher or lower and by how much? higher $21,700 higher $19,800 higher $16,380 higher $23,780