A company has a fiscal year-end of december 31: (1) on october 1, $22,000 was paid for a one-year fire insurance policy; (2) on june 30 the company lent its chief financial officer $20,000; principal and interest at 6% are due in one year; and (3) equipment costing $70,000 was purchased at the beginning of the year for cash. depreciation on the equipment is $14,000 per year. if the adjusting entries were not recorded, would net income be higher or lower and by how much?