Step 3: Predrill, countersink
Measure and mark both ends of the shorter 2x4's (on the broad face) 3/4" in from the edges and 3/4" in from the ends. The picture makes this much more clear. Predrill and countersink with the #10 bit. You will be drilling two holes in each end of each short 2x4, eight holes in all. After this step, there is no need to predrill any more holes, so put the countersink away.