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 $1$ Year $2$ Year $3$

Cumulative cost to date $$300,000$ $$390,000$ $$530,000$

Costs to complete at year end $250,000130,000-0-$

Progress billings $325,000220,000155,000$

Collections on account $300,000200,000200,000$

Assuming that $$65,000$ was recognized as gross profit in Year $1,$ the amount of gross profit Paulson recognized in Year $2$ was

$$135,000$

$$70,000$

$$35,000$

$$170,000$