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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 to 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. Waylands 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 2022, 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 prior to calculating taxes or other withholdings.

Example: Annual Salary to Hourly Rate, Nonexempt Employee

Employee Coopers annual salary is $62,000, and he is a nonexempt employee.

Hourly rate = $62,000 (52 40) = $62,000 2,080

Hourly rate = $29.80769 per hour

Example: Period Gross Pay, Salaried Employee

Employee Chinson earns an annual salary of $48,000 and is paid semimonthly.

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.

After the gross pay has been calculated, round the result to only two decimal points prior to calculating taxes or other withholdings.

Employees are paid for the following holidays occurring during the final quarter:

• Thanksgiving day and the day after, Thursday and Friday, November 24-25.
• Christmas is on Sunday. Employees receive holiday pay for Monday, December 26.

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 3.25% on the first $36,600 of employee wages. There is an additional 0.05% 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 wages for 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 2022 or later. Assume, all W-4s are received in 2022 and the Step 2 of Form W-4 is not checked.

Semimonthly Federal Percentage Method for Manual Payrolls with Forms W-4 from 2020 or later Tax Table	Appendix C
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)	3.25% on the first $36,600 of wages
Career Enhancement Program (employer only) (less Section 125)	0.05% on the first $36,600 of wages

October 1:

Wayland Custom Woodworking (WCW) pays its employees according to their job classification. Waylands staff comprises the following employees:

Employee Number	Name and Address	Payroll information
00-Chins	Anthony Chinson 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: 10/1/2022 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: 10/1/2022 SSN: 505-33-1775
01-Peppi	Sylvia Peppinico 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: 10/1/2022 SSN: 047-55-9951
01-Coope	Stevon Cooper 2215 Lands End Drive Glenbrook, NV 89413 775-555-9981 Job title: Craftsman	Single; None Nonexempt $62,000 per year Start Date: 10/1/2022 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: 10/1/2022 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: 10/1/2022 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 drivers license number is 168575381944 expiring on your birthday in 2024, 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, 2022, is as follows:

Wayland Custom Woodworking
Balance Sheet
November 30, 2022
Assets		Liabilities & Equity
Cash	$ 1,075,455.37	Accounts Payable	$ 112,747.25
Supplies	42,240.11	Salaries and Wages Payable	14,069.09
Office Equipment	87,250.00	Federal Unemployment Tax Payable	62.26
Inventory	167,099.00	Social Security Tax Payable	4,041.52
Vehicle	25,000.00	Medicare Tax Payable	945.24
Accumulated Depreciation, Vehicle	0.00	State Unemployment Tax Payable	1,059.26
Building	164,000.00	Career Enhancement Program Payable	16.30
Accumulated Depreciation, Building	0.00	Employee Federal Income Tax Payable	1,453.97
Land	35,750.00	401(k) Contributions Payable	1,223.46
Total Assets	$ 1,596,794.48	Employee Medical Premiums Payable	750.00
		Notes Payable	210,426.13
		Total Liabilities	346,794.48
		Owners' Equity	1,250,000.00
		Retained Earnings	0.00
		Total Equity	1,250,000.00
		Total Liabilities and Equity	$ 1,596,794.48

Voluntary deductions for each employee are as follows:

Name	Deduction
Chinson	Insurance: $50 per paycheck 401(k): 3% of gross pay
Wayland	Insurance: $75 per paycheck 401(k): 6% of gross pay
Peppinico	Insurance: $75 per paycheck 401(k): $50 per paycheck
Cooper	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: CALCULATING AN EMPLOYEE'S NET INCOME WITH DEDUCTIONS:

Determine gross wages by taking their annual salary and dividing 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.

Multiply hourly rate by the number of regular hours worked for hourly employees. 80 hours $23.07692 = $1,846.15 in regular wages.

Multiply any overtime worked by the overtime rate. 3 hours $23.07692 1.5 = $103.85 in overtime wages.

Total wages earned: $1,846.15 + 103.85 = $1,950.00.

Determine federal and state taxable wages: $1,950 50 (insurance) 58.50 (3% of gross for 401(k) plan deduction) = $1,841.50.

Determine FICA taxable wages: $1,950 50 (insurance) = $1,900.00.

Find the federal taxes in the appropriate tax table in Appendix C.

Multiply the FICA taxable wages by the Social Security rate (6.2%).

Multiply the FICA taxable wages by the Medicare rate (1.45%).

Multiply the federal taxable wages by the state tax rate.

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.

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 2022
Sunday	Monday	Tuesday	Wednesday	Thursday	Friday	Saturday
				1	2	3
4	5	6	7	8	9	10
11	12	13	14	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 2021, no box 2c has been checked. Refer to page 54 of publication 15-T

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, 2022. Remember that the employees are paid on a semimonthly basis.

Compute the net pay and update the Employees' Earnings Records with the December 15 pay and the new YTD information. Any hours worked in excess of 88 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 20, 2022.
• 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.

December 31

The final pay period of the year will not be paid to employees until January 4, 2023. The company will accrue the wages for the final pay period only. Because the pay period is complete, there will not be a reversing entry for the accrual. As a result, paychecks will not be issued for this pay period since they will be paid in the following year and reflected on the Employee Earning Record forms for each employee when paid. The remainder of the employer liability will be paid with the final filing for the year.

The company pays holiday pay for December 26, 2022. Reminder, holidays and vacations are not included as hours worked for calculation of overtime.

• Complete the Employee Gross Pay tab.
• Complete the Payroll Register for December 31.
• Complete the General Journal entries for the December 31 payroll.
• Update the General Ledger with the ending ledger balances from the December 15 pay period ledger accounts first, and then post the journal entries from the current period to the General Ledger.