Paulson Company uses the input method based on costs incurred to measure progress toward completion of long-term construction contracts. The following information relates to a contract that was awarded at a price of $700,000. The estimated costs were $500,000, and the contract duration was 3 years.Year 1Year 2Year 3Cumulative cost to date$300,000$390,000$530,000Costs to complete at year end250,000130,000-0-Progress billings325,000220,000155,000Collections on account300,000200,000200,000Assuming that $65,000 was recognized as gross profit in Year 1, the amount of gross profit Paulson recognized in Year 2 was $35,000 $135,000 $170,000 $70,000