PAYROLL ACCOUNTING PROJECT
Part 1 -
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. Wayland's 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 last month (December) of the fourth quarter (Q4) of 2016, which consists of the final two 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, Varden's 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 employee's 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 employee's yearly salary and dividing it by 24, which is the number of payroll periods with a semimonthly frequency. For example, Chinson's salary is $24,000 and is a full time employee. Chinson's 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.
Required 1: Complete the W-4 and, using the given information, complete the I-9 form to start your employee file. Complete it as if you are single with one withholding, you contribute 3% to a 401(k), and health insurance is $50 per pay period.
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 15
December 15 is the end of the first pay period for the month of December. Employee pay will be disbursed on December 19, 2016. Remember that the employees are paid on a semimonthly basis.
Compute the net pay and update the Employees' Earning Record 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 19, 2016.
- 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 3, 2017. The company will accrue the wages for the final pay period only. Since 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 company pays for the day before and the day of Christmas, and if the holiday is on a weekend, the company pays for the Friday before. Christmas fell on a Sunday, so employees will be paid for both the Friday and Monday as holiday pay. Employees worked extra hours on Saturday during the week of 12/23-12/29. 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.
Part 2 -
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. Wayland's 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. 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.
For Part 2 of this project, you will use the fourth quarter payroll information that you calculated in Part 1 to complete the following tax forms for Wayland Custom Woodworking:
- U.S. Form 941
- U.S. Form 940
- Utah Form TC-941
- Utah Form 33H
- Form W-2s for all 6 employees
- Form W-3 for WCW
Required 3: Complete Form 941 for the remittance of quarterly federal taxes.
Required 4: Complete Form 940 for Wayland Custom Woodworking.
Required 5: Complete Utah Forms TC-941 and 33H for the remittance of quarterly state taxes.
Required 6: Complete the employee W-2s and Wayland Custom Woodworking W-3 for 2016.
Attachment:- Assignment File.rar