Required information
Skip to question
[The following information applies to the questions displayed below.]
Wayland Custom Woodworking is a firm that manufactures custom cabinets and woodwork for business
and residential customers. Students will have the opportunity to establish payroll records and complete
a month of payroll information for Wayland.
Wayland Custom Woodworking is located at 12850 Old Highway 50, Glenbrook, Nevada, 89413, phone
number 775-555-9877. The owner is Mark Wayland. Wayland’s EIN is 91-7444533, and the Nevada
Employer Account Number is E6462582020-6. Wayland has determined it will pay its employees on a
semimonthly basis. Federal income tax should be computed using the percentage method for manual
payrolls with Forms W-4 from 2020 or later.
For Part 1 of this project, you will complete payroll for the last month (December) of the fourth quarter
(Q4) of 2024, which consists of the final pay periods of the year. Once payroll has been completed for
the fourth quarter, you will then file the annual tax forms for Wayland as well as prepare each
employee’s Form W-2 in Part 2.
Note: Rounding can create a challenge. For this project, the hourly rate for the individuals should be
rounded to 5 decimal places. Take the employee’s salary and divide it by 2,080 (52 weeks at 40 hours
per week) for full-time, nonexempt employees. NOTE: Leave the hourly rate rounded to five decimal
places as shown in the next example. After the gross pay has been calculated, then round the result to
two decimal points before calculating taxes or other withholdings.
Example A.1: Annual Salary to an Hourly Rate, Nonexempt Employee
Starfire’s annual salary is $62,000.
Hourly rate = $62,000 ÷ (52 × 40) = $62,000 ÷ 2,080
Hourly rate = $29.80769 per hour
Example A.2: Period Gross Pay, Exempt Employee
Adair’s annual salary is $48,000.
Period gross pay = $48,000 ÷ 24 = $2,000 gross pay
For pay periods with holiday hours: determine the amount paid per day, and multiply by the number of
days applicable to each pay period.
Annual salary: $48,000 ÷ (52 × 5) = $48,000 ÷ 260 = $184.61538 (rounded to five decimal points) per
day. Once you have the holiday pay, subtract it from their salary for the period for regular time.
Employees are paid for the following holidays occurring during the final quarter:
• Thanksgiving day and the day after, Thursday and Friday, November 28-29.
• Christmas is on Wednesday. Employees receive holiday pay for Wednesday, December 25.
For the completion of this project, refer to the tax-related information in the table below. Employees’
401(k) and insurance are pre-tax for federal income tax. The SUTA (UI) rate for Wayland Custom
Woodworking is 2.95 percent on the first $40,600 of employee wages. There is an additional 0.05
percent for Career Enhancement Program (CEP). FUTA, SUTA, and CEP allow for a deduction for Section
125 contributions, not for 401(k) contributions. Employer contribution of section 125 is 1.5 times the
employee portion and should be added to the wages for the completion of FUTA and SUTA forms. For
federal tax withholding calculations, use the percentage method tables for manual payroll systems with
Forms W-4 from 2020 or later. No employee has additional information in Step 4 of their W-4s, all W-4s
were received in 2024, and Box 2c has not been checked.
Semimonthly Federal Percentage Method for Manual Payrolls with
Forms W-4 from 2020 or later Tax Table
Appendix C (Download the
PDF file, 9.36 MB)
Federal Unemployment Rate (employer only) (less Section 125) 0.6% on the first $7,000 of
wages
State Unemployment Rate (employer only) (less Section 125) 2.95% on the first $40,600 of
wages
Career Enhancement Program (employer only) (less Section 125) 0.05% on the first $40,600 of
wages
October 1:
Wayland Custom Woodworking (WCW) pays its employees according to their job classification.
Wayland’s staff comprises the following employees:
Employee Number Name and Address Payroll information
00-Adair Chin Adair
530 Chimney Rock Road
Stateline, NV 89449
775-555-1212
Job title: Account Executive
Married Filing Jointly; 2 < 17
Exempt
$48,000 per year + commission
Start Date: 10/1/2024
SSN: 511-22-3333
00-Wayla Mark Wayland
1650 Power House Drive
Glenbrook, NV 89413
775-555-1110
Job title: President or Owner
Married Filing Jointly; 3 < 17, 1 Other
Exempt
$85,000 per year
Start Date: 10/1/2024
SSN: 505-33-1775
01-Pinco Sly Pinco
1575 Flowers Avenue
Glenbrook, NV 89413
775-555-2244
Job title: Craftsman
Married Filing Jointly; 1 < 17, 1 Other
Exempt
$58,500 per year
Start Date: 10/1/2024
SSN: 047-55-9951
01-Starf Eagle Starfire
2215 Lands End Drive
Single; None
Nonexempt
Employee Number Name and Address Payroll information
Glenbrook, NV 89413
775-555-9981
Job title: Craftsman
$62,000 per year
Start Date: 10/1/2024
SSN: 022-66-1131
02-Hisso Leonard Hissop
333 Engine House Circle
Glenbrook, NV 89413
775-555-5858
Job title: Purchasing or Shipping
Single; 1 Other
Nonexempt
$51,500 per year
Start Date: 10/1/2024
SSN: 311-22-6698
00-Succe Student Success
16 Kelly Circle number 2
Glenbrook, NV 89413
775-556-1211
Job title: Accounting Clerk
Single; None
Nonexempt
$42,000 per year
Start Date: 10/1/2024
SSN: 555-55-5555
The departments are as follows:
Department 00: Sales and Administration
Department 01: Factory workers
Department 02: Delivery and Customer service
You have been hired as of October 1 as the new accounting clerk. Your employee number is 00-SUCCE.
Your name is Student Success. Your address is 16 Kelly Circle number 2, Glenbrook, NV 89413. Your
phone number is 775-556-1211, you were born on July 16, 2001, your Nevada driver’s license number is
168575381944 expiring on your birthday in 2027, and your Social Security number is 555-55-5555. You
are nonexempt and paid at a rate of $42,000 per year as an accounting clerk.
The balance sheet for WCW as of November 30, 2023, is as follows:
Wayland Custom Woodworking
Balance Sheet
November 30, 2024
Assets Liabilities & Equity
Cash $
1,074,686.14
Accounts Payable $ 112,747.25
Supplies 42,240.11 Salaries and Wages Payable 13,699.18
Office Equipment 87,250.00
Federal Unemployment Tax
Payable 57.00
Inventory 167,068.96 Social Security Tax Payable 3,930.34
Vehicle 25,000.00 Medicare Tax Payable 919.24
Accumulated Depreciation,
Vehicle 0.00 State Unemployment Tax Payable 935.03
Building 164,000.00
Career Enhancement Program
Payable 15.85
Accumulated Depreciation,
Building 0.00
Employee Federal Income Tax
Payable 1,138.94
Land 35,750.00 401(k) Contributions Payable 1,191.50
Total Assets $
1,595,995.21
Employee Medical Premiums
Payable 750.00
Notes Payable 210,610.88
Total Liabilities 345,995.21
Owners’ Equity 1,250,000.00
Retained Earnings 0.00
Total Equity 1,250,000.00
Total Liabilities and Equity $
1,595,995.21
Voluntary deductions for each employee are as follows:
Name Deduction
Adair Insurance: $50 per paycheck
401(k): 3% of gross pay
WaylandInsurance: $75 per paycheck
401(k): 6% of gross pay
Pinco Insurance: $75 per paycheck
401(k): $50 per paycheck
Starfire Insurance: $50 per paycheck
401(k): 4% of gross pay
Hissop Insurance: $75 per paycheck
401(k): 3% of gross pay
Success Insurance: $50 per paycheck
401(k): 3% of gross pay
Example A.3: Calculating An Employee’S Net Income With Deductions:
1. Determine employee gross wages by taking their annual salary and dividing it by the number of
pay periods ($48,000 ÷ 24 pay periods = $2,000 per pay period). Or when the employee is
nonexempt, take this one step further to determine the hourly rate ($48,000 ÷ (52 weeks × 40
hours per week)) = $23.07692 per hour.
2. Multiply the hourly rate by the number of regular hours worked by hourly employees. 80 hours
× $23.07692 = $1,846.15 in regular wages.
3. Multiply any overtime worked by the overtime rate. 3 hours × $23.07692 × 1.5 = $103.85 in
overtime wages.
4. Total wages earned: $1,846.15 + $103.85 = $1,950.00.
5. Determine federal and state taxable wages: $1,950 − $50 (insurance) − $58.50 (3% of gross for
401(k) plan deduction) = $1,841.50.
6. Determine FICA taxable wages: $1,950 − $50 (insurance) = $1,900.00.
7. Find the federal taxes in the appropriate tax table in Appendix C (Download the PDF file, 9.36
MB).
8. Multiply the FICA taxable wages by the Social Security rate (6.2%).
9. Multiply the FICA taxable wages by the Medicare rate (1.45%).
10. Multiply the federal taxable wages by the state tax rate.
11. Subtract all deductions from gross wages to obtain net income.
For additional instructions on how to navigate and work through through Part 1 of this project,
please download the student project guide here (Download the Word file, 236 KB).
Required:
2. Complete the payroll process for Wayland Custom Woodworking’s last two pay periods of the fourth
quarter. Please note that you must carry the ending balance from each account in the December 15
General Ledger to the following period’s General Ledger to the input boxes titled “Ending account
balance from the prior period” before posting the payroll journal entries from the current period to the
Ledger.
For additional instructions on how to carry information from one pay period General Ledger to another,
along with a guided walkthrough example of this process, refer to the project user guide in the project
information section above.
December 2024
Sunday MondayTuesdayWednesdayThursdayFriday Saturday
1 2 3 4 5 6 7
8 9 10 11 12 13 14
December 2024
Sunday MondayTuesdayWednesdayThursdayFriday Saturday
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30 31
No employee has additional information in Step 4 of their W-4s, all W-4s were received in 2024, no box
2c has been checked. Refer to page 59 of publication 15-T (Opens in a new tab or window)
December 15
December 15 is the end of the first pay period for the month of December. Employee pay will be
disbursed on December 20, 2024. Remember that the employees are paid on a semimonthly basis.
Compute the net pay and update the Employee Earnings Records with the December 15 pay and the
new YTD information. Any hours worked in excess of 80 hours during this pay period are considered
overtime for nonexempt employees.
• Complete the Employee Gross Pay tab.
• Complete the Payroll Register for December 15 Pay. Employee pay will be disbursed on
December 18, 2024.
• Refer to the Employee Earning Record Forms for each employee for the current YTD amounts
after you have completed the December 15 Payroll Register and update each EERF with the
amounts from the current period. YTD amounts from the previous four pay periods of the fourth
quarter are shown for each employee.
• Complete the General Journal entries for the December 15 payroll.
• Post the journal entries to the General Ledger. Amounts for the ledger accounts from the
previous four pay periods of the fourth quarter are shown.
