@kamronbentz There are tons of tools; no one tool is going to work the best for all cases.
Popular tools for raw audio include freeware like Audacity, as well as pay-for software like Adobe Audition and WaveLab.
Popular tools for sequencing and arranging include DAWs like Ableton, Nuendo, and Pro Tools. (Pro Tools can also double as a raw sample editor pretty well, but it's also the most expensive of the bunch.)
And then, MOST of the magic will actually come from the game integration – you will use some library like WWise or Miles or FMOD, that typically comes with its own authoring system, OR you will use a built-in system like the support in Unreal Engine for sound. This lets you bind events and data in the game (what actor, in what environment, with how much emphasis, how far away, moving how fast …) to affect the playback and even construction of the sound cue.
MP3 versus WAV are apples and oranges. MP3 is a distribution format for music. WAV is a mastering format for sound of all kinds. (There's also AIFF, still, at least on the macOS side.) Which specific distribution format your game engine uses depends on the engine and library used.