A company has a fiscal year-end of December 31: 

(1) on October 1, $16,000 was paid for a one-year fire insurance policy; 

(2) on June 30 the company advanced its chief financial officer $14,000; principal and interest at 8% on the note are due in one year; 

(3) equipment costing $64,000 was purchased at the beginning of the year for cash. 

Depreciation on the equipment is $12,800 per year. If the adjusting entries were not recorded, would net income be higher or lower and by how much?