It's the day of SpongeBob's boating school test. He rides his bike to Mrs. Puff's Boating School and jumps into one of the boats. Once SpongeBob is in the driving boat, he tries to move out of the parking space, but crashes into two cars continuously. After crashing too many times, Mrs. Puff then inflates so much, she sends the car airborne. SpongeBob then crashes the car into the lighthouse, injuring Mrs. Puff.
In the hospital, Dr. Forrest clarifies that Mrs. Puff's inflation sac was popped in the collision and she will not be able to "puff" again. Mrs. Puff has to be tranquilized after she leaps onto SpongeBob and man-handles his nose. SpongeBob then begins to ramble and the doctor tranquilizes him as well. He then visits Mrs. Puff with a bouquet of flowers along with the hundreds of other flowers he sent her, which she appears to be allergic to.
After forcing her into a wheelchair, he pushes her down the hallway. Doctors are seen sprinting through the hallway with muscular men on the gurneys. SpongeBob stops the Purple Doctorfish and asks him what is going on. He replies with saying that the Demolition Derby fish are about to battle in the hospital room. Mrs. Puff then imagines them smashing into SpongeBob and killing him. She comes up with a plan and claims she has a way for SpongeBob to earn "extra credit."
After leaving the hospital and talking to Captain Lutefisk, she shows him how much damage SpongeBob can do with a boat, though he is just using a steering wheel. Lutefisk says he is perfect for the derby and makes him a sock mask.
At the derby, Mrs. Puff is enraged at how SpongeBob is defeating the competitors only by serendipity. She then grabs a giant monster boat and starts to chase after SpongeBob, trying to murder him. They then collide into the boating school, where Mrs. Puff regains her "puff" again. SpongeBob then asks her "So how much extra credit did I earn?"