60.1K

Verified Solution

Link Copied!

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 1716 Nichol Street, Logan, Utah, 84321, phone number 435-555-9877. The owner is Mark Wayland. Waylands EIN is 91-7444533, and the Utah Employer Account Number is 999-9290-1. Wayland has determined it will pay their employees on a semimonthly basis. Federal income tax should be computed using the percentage method.

For Part 1 of this project, you will complete payroll for the entire fourth quarter (Q4) of 2016, which consists of the final six 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.

The SUTA (UI) rate for Wayland Custom Woodworking is 2.6% on the first $32,200. The state withholding rate is 5.0% for all income levels and marital statuses, which will be used in computing Utah withholding tax for each employee using the tax tables provided below.

Rounding can create a challenge. For this project, the hourly rate for the individuals should be rounded to five decimal places. So take their salary and divide by 2,080 (52 weeks at 40 hours per week) for all full time employees, both exempt and nonexempt. For nonexempt employees, such as Stevon Varden, Vardens salary is $42,000 and is a nonexempt employee, so the calculation will be $42,000/2,080, which would give you $20.19231 per hour, and use this to compute the employees gross pay based on the number of hours worked. When a nonexempt employee has worked overtime hours for a given pay period, take their regular hourly rate and multiply it by 1.5, round the result to 5 decimal places, and multiply the new rate by their number of overtime hours.

For exempt employees, such as Anthony Chinson, an hourly rate rounded to five decimal places should be determined using the same method shown above, but gross pay should be determined by taking the exempt employees yearly salary and dividing it by 24, which is the number of payroll periods with a semimonthly frequency. For example, Chinsons salary is $24,000 and is a full time employee. Chinsons hourly rate is $11.53846 (determined by taking $24,000/2,080), but as he is an exempt employee, the calculation for his gross pay will be $24,000/24, which would give you $1,000. For pay periods that include paid holidays, ensure to distribute an exempt employee's regular pay accordingly to holiday pay based on the number of hours that consist of the holidays for that period.

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, which is a Sunday. When holidays occur on a weekend, the preceding Friday, December 23, is considered a holiday. Employees receive holiday pay for Monday, December 26.

For the completion of this project, refer to the tax-related information in the table below. For federal withholding calculations, use the percentage method tables in Appendix C, which is provided below. For Utah state withholding calculations, use the Utah Schedule 3 tax tables linked below (ensure to use the appropriate Utah table based on each employee's marital status). Both 401(k) and insurance are pretax for federal income tax and Utah income tax.

Federal Withholding Allowance (less 401(k), Section 125)	$168.80 per allowance claimed
Semimonthly Federal Percentage Method Tax Table	Appendix C Page 254 Table #3
Federal Unemployment Rate (employer only) (less Section 125)	0.6% on the first $7,000 of wages
State Withholding Rate (less 401(k), Section 125)	See Utah Schedule 3, Table 1 or use the Excel Version of Schedule 3
State Unemployment Rate (employer only) (less Section 125)	2.6% on the first $32,200 of wages

The balance sheet for WCW as of September 30, 2016, is as follows:

Wayland Custom Woodworking Balance Sheet 9/30/2016
Assets				Liabilities & Equity
Cash	$	1,125,000.00		Accounts Payable	$	112,490.00
Supplies		27,240.00		Salaries and Wages Payable
Office Equipment		87,250.00		Federal Unemployment Tax Payable
Inventory		123,000.00		Social Security Tax Payable
Vehicle		25,000.00		Medicare Tax Payable
Accumulated Depreciation, Vehicle				State Unemployment Tax Payable
Building		164,000.00		Employee Federal Income Tax Payable
Accumulated Depreciation, Building				Employee State Income Tax Payable
Land		35,750.00		401(k) Contributions Payable
Total Assets		1,587,240.00		Employee Medical Premiums Payable
				Notes Payable		224,750.00
				Utilities Payable
				Total Liabilities		337,240.00
				Owners' Equity		1,250,000.00
				Retained Earnings		-
				Total Equity		1,250,000.00
				Total Liabilities and Equity		1,587,240.00

October 1:

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

Employee Number	Name and Address	Payroll information
00-Chins	Anthony Chinson	Married, 1 Withholding allowance
	530 Sylvann Avenue	Exempt
	Logan, UT 84321	$24,000/year + commission
	435-555-1212	Start Date: 10/1/2016
	Job title: Account Executive	SSN: 511-22-3333
00-Wayla	Mark Wayland	Married, 5 withholding allowances
	1570 Lovett Street	Exempt
	Logan, UT 84321	$75,000/year
	435-555-1110	Start Date: 10/1/2016
	Job title: President/Owner	SSN: 505-33-1775
01-Peppi	Sylvia Peppinico	Married, 7 withholding allowances
	291 Antioch Road	Exempt
	Logan, UT 84321	$43,500/year
	435-555-2244	Start Date: 10/1/2016
	Job title: Craftsman	SSN: 047-55-9951
01-Varde	Stevon Varden	Married, 2 withholding allowances
	333 Justin Drive	Nonexempt
	Logan, UT 84321	$42,000/year
	435-555-9981	Start Date: 10/1/2016
	Job title: Craftsman	SSN: 022-66-1131
02-Hisso	Leonard Hissop	Single, 4 withholding allowances
	531 5th Street	Nonexempt
	Logan, UT 84321	$49,500/year
	435-555-5858	Start Date: 10/1/2016
	Job title: Purchasing/Shipping	SSN: 311-22-6698
00-Succe	Student F Success	Single, 1 withholding allowance
	1650 South Street	Nonexempt
	Logan, UT 84321	$36,000/year
	435-556-1211	Start Date: 10/1/2016
	Job title: Accounting Clerk	SSN: 555-55-5555

Voluntary deductions for each employee are as follows:

Name	Deduction
Chinson	Insurance: $50/paycheck
	401(k): 3% of gross pay
Wayland	Insurance: $75/paycheck
	401(k): 6% of gross pay
Peppinico	Insurance: $75/paycheck
	401(k): $50 per paycheck
Varden	Insurance: $50/paycheck
	401(k): 4% of gross pay
Hissop	Insurance: $75/paycheck
	401(k): 3% of gross pay
Student	Insurance: $50/paycheck
	401(k): 3% of gross pay

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 F Success. Your address is 1650 South Street, Logan, UT 84321. Your phone number is 435-556-1211, you were born July 16, 1985, your Utah driver's license number is 887743 expiring in 7/16/2018, and your Social Security number is 555-55-5555. You are considered a nonexempt employee, have one withholding allowance, and paid a rate of $36,000 per year.

For additional instructions on how to navigate and work through through Part 1 of this project, please download the student project guide here.

rev: 01_11_2017_QC_CS-74391

Required:

2. Complete the payroll process for Wayland Custom Woodworking's fourth quarter pay periods. Please note that for pay periods after October 15, you must carry the current ending year to date (YTD) amounts as they appear from the prior pay period from each employee's Employee Earning Records form (EERF) to the rows titled "Prior Period YTD". Amounts from the current pay period will be auto-populated to the employee EERFs once you complete the payroll register, and will be combined with the prior period YTD amounts to determine the new current ending YTD amounts.

For example, if the year to date gross pay for Anthony Chinson is $5,000 after the October 31 pay period, you would take this amount and add it to the appropriate input box for gross pay on the "Prior Period YTD" row for their November 15 EERF.

Additionally, you must carry the ending balance from each account in the prior period 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.

EMPLOYEE EARNINGS RECORD Name Address City/State/Zip Telephone Social Security Number Position Anthony Chinson 530 Sylvann Avenue Logan, UT 84321 435-555-1212 511-22-3333 Account Executive Hire Date Date of Birth Exempt/Nonexempt Married/Single No. of exemptions Pay Rate (Hourly, Yearly, Yearly$24,000/year + Commission October 01, 2016 Exempt Married + Commission) xle Taxable Pay Pay Federal)(FICA) CommiGross Pay Hours Period Ended Worked Regular PayO.T. Pay Holiday Pay s Insurance 401(k) ssions 10/15/2016 0.00 $ 2,450.00 2,375.00 0.00 0.00 $ 0.00 0.00 $ 0.00 0.00 0.00 $ 0.00 2375.00 $ 2,450.00 Taxable Pay Taxable Pay Federal for Federal for FICA State Income Total Deductions Net pay Social YTD Net Pay Gross Pa YTD Medicare Income Tax Security Tax S 2,375.00 $ 2,450.00 0.00 EMPLOYEE EARNINGS RECORD Name Address City/State/Zip Telephone Social Security Number Position Anthony Chinson 530 Sylvann Avenue Logan, UT 84321 435-555-1212 511-22-3333 Account Executive Hire Date Date of Birth Exempt/Nonexempt Married/Single No. of exemptions Pay Rate (Hourly, Yearly, Yearly$24,000/year + Commission October 01, 2016 Exempt Married + Commission) xle Taxable Pay Pay Federal)(FICA) CommiGross Pay Hours Period Ended Worked Regular PayO.T. Pay Holiday Pay s Insurance 401(k) ssions 10/15/2016 0.00 $ 2,450.00 2,375.00 0.00 0.00 $ 0.00 0.00 $ 0.00 0.00 0.00 $ 0.00 2375.00 $ 2,450.00 Taxable Pay Taxable Pay Federal for Federal for FICA State Income Total Deductions Net pay Social YTD Net Pay Gross Pa YTD Medicare Income Tax Security Tax S 2,375.00 $ 2,450.00 0.00

Answer & Explanation Solved by verified expert

See Answer