When the new aqua lounge is flooded, Mr. Tipton orders Mr. Moseby to kick off whoever was responsible for the mess. Moseby assumes Zack is the culprit, but Cody, London, Bailey and Woody all believe they are individually responsible for the disaster for different reasons. It is eventually revealed that it was actually Moseby himself who caused the flood by dropping his pocket hankie into the tank. To help Moseby keep his job, London takes the blame and just gets an allowance cut. Meanwhile Marcus has been planning a rap musical. At the end of the episode, he leaves the ship to make a Broadway musical based on his hit song "Retainer Baby" after he and Zack videotaped demos of the songs which he sent to Broadway producers.
- "Wonderful Surprise" by Shawn Hlookoff
- Matthew Timmons as Woody Fink, Lisa K. Wyatt as Frankie
- This was Doc Shaw's final appearance in the series as Marcus Little, yet this is also the first episode of the season in which the entire main cast is present.