A contractor at the end of its s second year working on a contract finds that the total estimated cost of the contract ($600,000) exceeds the contract price ($550,000). At the end of the first year of the contract, $20,000 of gross profit was recognized. The percentage of completion at the end of year 2 is 40%. What amount of loss is recognized for the second year?

20,000

50,000

70,000

40,000

10,000