Go to Gradebook.
Select the Gradebook tool from the Tool Menu of your site.
For the gradebook item that you want to excuse, select the down arrow within the cell for the student's grade and choose Excuse/Include Grade.
The individual grade will be excluded from course grade calculations.
Note: The excluded grade cell will show a calculator icon with a diagonal line through it and the score itself will be in strikethrough font, indicating that it has been excluded.