Week 12 Accounting Workshop: The Mechanic's Payroll Register

Part 1 — The Big Picture

This week you learned that a paycheck creates debts to more than the employee: the business owes the employee the net pay, owes the government the taxes it withheld, and owes its own matching payroll taxes on top. In this workshop you run one small payroll end to end for the bicycle shop's mechanic. You build a payroll register from the hours to the net pay, record the payroll and the shop's own taxes with balanced entries, record the payments that clear every payable, check a second employee near the Social Security wage base, and then audit a chatbot's version of the same payroll.

Time budget: Plan for about 90 minutes.

Part 2 — The Task

Guiding question: What did one week of the mechanic's work cost the bicycle shop, and how much of that cost does the mechanic actually take home?

Workshop data: Dataset I, the bicycle shop mechanic's weekly paycheck (illustrative wages at the real 2026 rates)

Source: The running case: an illustrative, unnamed bicycle repair and sales shop, organized as a corporation by two founders, paying its mechanic for one week at the 2026 Social Security and Medicare rates; the wages describe no real business.

• Rows: one mechanic's weekly paycheck of 7 lines from regular pay to net pay, plus the employer's match and one second employee near the wage base; the payroll register has 7 rows, the entry table has 4 rows, and the wage-base table has 4 rows
• Hours and rate: 45 hours in one workweek at $24 an hour; 40 regular hours and 5 overtime hours
• 2026 rates: Social Security 6.2 percent on wages up to the $184,500 wage base; Medicare 1.45 percent with no wage base
• Federal income tax withheld: $95.00, an illustrative amount, never computed from the IRS tables
• Second employee: $184,000 of wages this year before a $1,140 paycheck

Part 3 — Materials & Procedure

Tools and materials

• A free spreadsheet (Google Sheets, or any free spreadsheet) for journals, T-accounts, trial balances, schedules, and statements, with every total computed by formula; the SEC's free EDGAR search for public companies' annual reports; and one approved chatbot used as a sparring partner whose entries, totals, and claims about standards and tax rates the student checks by hand and against the pinned source before trusting them
• A free spreadsheet (Google Sheets, or any free spreadsheet)
• One approved chatbot

Ways of working

• record-and-post
• adjust-and-report
• analyze-and-explain

Procedure

1. Read Dataset I in Part 2 twice. In one line each, say which amounts are earned by the mechanic, which are withheld and sent to the government, and which are the shop's own cost. Check: Three short lines that keep gross pay, withholdings, and the shop's own taxes apart.
2. Open a new sheet and copy the payroll register from Part 4. Compute each line by formula: regular pay, overtime pay at time and one-half, gross pay, each tax rounded to the cent, and net pay; type the illustrative income tax as given. Tool: A free spreadsheet (Google Sheets, or any free spreadsheet). Check: A register whose net pay row equals gross pay minus the three withholdings, with a check cell showing 0.
3. On a second tab, copy the entry table from Part 4 and write the four entries: the payroll, the shop's matching taxes, the paycheck, and the payment to the government. List all debits before all credits and total each side by formula. Tool: A free spreadsheet (Google Sheets, or any free spreadsheet). Check: Four entries whose debits equal their credits, and every payable back to zero after Entries 3 and 4.
4. On a third tab, copy the wage-base table and compute the second employee's Social Security and Medicare on the $1,140 paycheck. Tool: A free spreadsheet (Google Sheets, or any free spreadsheet). Check: Social Security taxed only on the room left below the wage base, and Medicare on the whole paycheck.
5. Answer the analysis questions in Part 5, including the plain sentence that says what the payroll cost the shop and what the mechanic took home. Check: Written answers to all five questions.
6. Paste your tables and then the Part 6 prompt into one approved chatbot. Compare every figure, every entry, every rate, and every claim about a rule with your own work and with Chapter 12, and write the critique report, or complete the equivalent route instead. Tool: One approved chatbot. Check: A three-to-five-sentence report that quotes at least two of the chatbot's slips and corrects each by hand, or the marked-up equivalent-route analysis.

Fallback route

When to use it: Use this route if you cannot open a spreadsheet or print the tables.

Copy the three tables by hand onto paper or into any text file, read Dataset I from this page, compute each line by hand, add each entry's debits and credits twice, and complete every analysis question and the critique step in the same order. Submit a photo or scan of the paper, or the text file, for equal credit.

This route earns the same credit as the primary route.

Part 4 — The Scaffold

Build the paycheck one line at a time, so every figure from gross pay down to net pay can be footed.

Student scaffold table 1

Line	How it is found	Amount
Regular pay	40 hours × $24
Overtime pay	5 hours × time and one-half
Gross pay	regular pay + overtime pay
Social Security withheld	gross pay × 6.2 percent, to the cent
Medicare withheld	gross pay × 1.45 percent, to the cent
Federal income tax withheld	illustrative amount, given	95.00
Net pay	gross pay − all three withholdings

Record what the payroll created and what clears it, so every liability is shown when it arises and when it is paid.

Student scaffold table 2

Entry	What it records	Accounts debited and amounts	Accounts credited and amounts
1	The week's payroll
2	The shop's matching Social Security and Medicare
3	Paying the mechanic
4	Sending the withheld and matching taxes to the government

Apply the wage base to the second employee, so you can see which tax stops and which keeps going.

Student scaffold table 3

Step	Amount
Room left below the $184,500 wage base
Social Security withheld on this paycheck
Medicare withheld on this paycheck
Wages this year after the paycheck

Part 5 — Analysis Questions

1. Compute the mechanic's gross pay and net pay, showing the overtime rate, each withholding to the cent, and the check that the withholdings and net pay add back to gross pay.
2. Compute the week's total payroll cost to the shop, and show that it equals the cash the shop pays out in Entries 3 and 4.
3. Explain why the shop's matching Social Security and Medicare is recorded as Payroll Tax Expense and not taken from the mechanic's pay, and why the tax payables are current liabilities.
4. Write one plain sentence saying what the payroll cost the shop and what the mechanic took home. Then say in words how the second employee's Social Security differs from the mechanic's, and why Medicare does not change.
5. Choose one reflection: (a) which payroll amount did your first instinct treat as the shop's cost or as the paycheck when it was not, and what changed your mind? or (b) name one cost this register leaves out, and say why the course does not compute it.

Part 6 — AI-Critique Moment

Choose one equal-credit critique route. Route A: ask an approved AI tool to critique your completed work, then check its response against your own evidence. Route B is the no-AI equivalent printed below.

Approved tools: Claude, Gemini, ChatGPT, Grok, Microsoft Copilot.

Prompt to paste:

I've pasted my completed payroll register and journal entries above. Here is an illustrative bicycle shop. Its mechanic is paid $24 an hour, is covered by the Fair Labor Standards Act and not exempt, and worked 45 hours in one workweek of 2026. The shop withholds Social Security and Medicare at the 2026 rates and an illustrative $95.00 of federal income tax. Please compute the mechanic's gross pay and net pay, write the journal entry that records the payroll, write the entry for the shop's own matching payroll taxes, and say in which period that payroll tax expense belongs. A second employee has $184,000 of wages this year before a $1,140 paycheck: how much Social Security is withheld from it? Then tell me which section of the balance sheet the tax payables belong in, which rule sets the overtime rate, what Social Security rate and wage base apply in 2026, whether a campus bookstore's sales tax collected counts as revenue when the cash comes in, whether the shop's net income shows it has the cash to meet this payroll, whether the delivery van's $5,400 a year of straight-line depreciation means the van is worth less, and whether the shop could use LIFO for its bicycles under IFRS.

Test the response for these likely failures:

• Chatbots sometimes write the payroll entry backwards, debiting Wages Payable and crediting Wages Expense.
• Chatbots often leave Federal Income Tax Payable out of the payroll entry, so the credits total only 1,045.00 against a 1,140.00 debit.
• Chatbots sometimes subtract the withholdings wrongly and report net pay of $957.97, or pay all 45 hours at $24 for gross pay of $1,080.
• Chatbots sometimes treat the shop's $87.21 match as another withholding taken from the mechanic, or list the tax payables as long-term liabilities.
• Chatbots often record the shop's payroll tax expense only when the taxes are sent to the government, in a later period.
• Chatbots often quote an earlier year's Social Security wage base, or charge Social Security on the second employee's whole $1,140.
• Chatbots sometimes say the overtime rule requires double pay, or overtime after 8 hours in a day, and cite it as federal law.
• Chatbots sometimes count all the cash a store takes in, sales tax included, as revenue the moment it arrives.
• Chatbots sometimes say a profitable month means the shop has the cash for payroll.
• Chatbots often describe the van's $5,400 a year of depreciation as the fall in what it would sell for.
• Chatbots sometimes say IFRS lets the shop pick LIFO for its bicycles.

Write three to five sentences naming what the chatbot got right and at least two places where it slipped into one of the failures above, quoting its words and correcting each by hand against Dataset I, Chapter 12, and the pinned source.

Equivalent route (no AI required)

No AI account is required for this workshop. This route assesses the same objectives, Objective 7 (account for long-lived assets, including cost, depreciation by three methods, and disposal, and for current liabilities, including payroll) and Objective 3 (apply accrual accounting: recognize revenue and expenses in the right period, prepare adjusting entries for deferrals and accruals, and prepare an adjusted trial balance), takes comparable effort of about the same 90 minutes, uses the same rubric, and earns the same credit. Instead of the chatbot, critique this flawed analysis of Dataset I, printed here in full: "The mechanic worked 45 hours at $24, so gross pay is 45 × 24 = $1,080, because federal law pays overtime only after 8 hours in a day. Social Security is withheld at 6.2 percent up to the wage base the Social Security Administration set two years ago. The withholdings are 66.96 for Social Security, 15.66 for Medicare, and 95.00 of income tax, so net pay is $902.83. The shop's matching $87.21 is also taken out of the mechanic's check, since it is the mechanic's tax. The payroll entry is debit Wages Payable 1,140.00 and credit Wages Expense 1,140.00, then debit Wages Expense 957.79 and credit Social Security Tax Payable 70.68 and Wages Payable 957.79. The tax payables are long-term liabilities because they are paid to the government. The payroll tax expense is recorded next quarter, when the taxes are paid. The second employee's Social Security is 1,140 × 0.062 = 70.68, because the tax applies to every dollar. A campus bookstore counts its sales tax as revenue the day the cash comes in. The shop had a profitable month, so its net income shows it has the cash for payroll. The van's $5,400 a year of depreciation shows how much less it would sell for. And under IFRS the shop could use LIFO for its bicycles." Mark every error you find, name the failure it shows, and correct it by hand against Dataset I, Chapter 12, and the pinned source; find at least two. The wage base in it is out of date on purpose and is itself one of the errors. Submit the marked-up analysis with your corrections in place of the chatbot report and share link.

Part 7 — What to Submit

• The completed payroll register, entry, and wage-base tables from Part 4, with every entry footed
• Written answers to all five analysis questions
• The chatbot critique report with its share link, or the equivalent route's marked-up flawed analysis

Deliverable:

A short Accounting Workshop report on the bicycle shop's weekly payroll: three completed tables (the payroll register, the four entries, and the wage-base check), written answers to five analysis questions, and a critique of a chatbot's version of the same payroll, or, on the equivalent route, a marked-up correction of the printed flawed analysis. Choose how you show it: a completed spreadsheet with written answers, a recorded explanation with a transcript, or hand-drawn tables with short notes; every form is graded by the same scoring criteria. Submit in any accessible file type or as a link; a recorded response may be submitted as audio or video with a transcript, or as text.

Rubric

The rubric below shows how each submitted part is evaluated; bands are full, partial, or none.

Workshop evaluation criteria

Criterion	Full	Partial	None
Payroll register computed and footed	Gross pay of 1,140 includes the overtime at time and one-half, each tax is right to the cent, net pay is 957.79, and the four lines add back to gross pay by formula or written sum.	Gross pay or net pay is right but one line is off, or every line is right but the add-back check is missing.	No register, or gross pay that ignores the overtime rule and a net pay that does not follow from it.
Balanced payroll entries and payments	All four entries use the right accounts and amounts, each lists all debits before all credits with equal totals, and every payable returns to zero after the payments.	Two or three entries are right, or all four are present but one is reversed, unbalanced, or leaves a payable open.	Fewer than two correct entries, or the shop's match recorded as a deduction from the mechanic's pay.
Plain-sentence reading and the wage base	One plain sentence states the shop's cost and the mechanic's take-home pay, and the second employee's Social Security is taxed only below the wage base while Medicare applies to the whole paycheck.	The plain sentence or the wage-base reading is present, but not both, or one of them is vague.	Neither the plain sentence nor the wage-base reading is present.
Caught-and-corrected AI slip, on either route	The chatbot critique report, or the equivalent route's marked-up flawed analysis, quotes at least two errors and corrects each by hand against Dataset I, Chapter 12, and the pinned source; either route earns this band equally.	One error is quoted and corrected on either route, or errors are named without a correction.	No critique on either route, or chatbot output is pasted without checking it.
Cost, classification, and reflection	The total payroll cost ties to the cash paid out, the match and the payables are classified correctly, and the chosen reflection option is answered with a specific payroll amount or cost from Dataset I.	Two of those three parts are present, or one is general.	None of the three parts is present.

Quality Gate

• Gross pay includes the 5 overtime hours at time and one-half, and every tax is rounded to the cent.
• Net pay equals gross pay minus all three withholdings, and the four lines add back to gross pay.
• Every entry lists all debits before all credits, and its debits equal its credits.
• The shop's matching taxes are recorded as Payroll Tax Expense and never subtracted from the mechanic's pay.
• No standard, rule, rate, statistic, or quotation is invented anywhere in the submission, and income tax withholding is never computed.
• The critique quotes the chatbot or the flawed analysis and corrects at least two errors by hand.