After you defeat King Calamari, you reach the second part of the Sunken Ship.
Explore the Second Part of the Sunken Ship
Go northeast through the door. In the room with the Dry Bones, jump onto the stack of two blocks, then jump northwest onto the ledge. Go northwest through this upper door.
There are Alley Rats on top of cannons that are shooting Bullet Bills. If you walk in front of a Bullet Bill, you will be knocked down to the lower area. If this happens, you will have to go southwest to the room with the Dry Bones, then return to where the Alley Rats are shooting the cannons.
After you get past all the cannons, go southeast through the door.
There Alley Rats going up and down the stairs here. Go down the stairs and go through the door at the end.
There is an Alley Rat hiding in the tunnel behind the stack of blocks, so you might want to just jump over the Alley Rat that you can see. Go northwest to the stack of barrels, jump on top, then jump from there to the area with the treasure chests. Open them to get coins.
Then go through the northwest door. As you go southwest, you find a clone of yourself walking in the opposite direction. It will block your path, but if you run and jump, you will jump over its head. Before you leave the room, stand in the middle of the southeast wall, and jump. You will hit a hidden floating block, revealing a treasure chest. Jump on the Mario clone's head to reach it. It contains a Croaka Cola/KeroKeroCola. Go through the southwest door.
You'll be back in the room where you found two chests earlier, but on the other side of the wall that has a Dry Bones on top. Go southwest to the next room.
There is a wall of blocks to the northwest. You can go past the northernmost Dry Bones to walk behind that wall and go through a hidden door in the middle of the northwest wall. In the room beyond, open the chest to get a Frog Coin. Then go back to the room with the wall of blocks and the Dry Bones. Go down the southern stairs.
Hit the chest to get a mushroom that heals everyone. Then use the Save Block, then jump over the east wall. Beware that the chest beyond the wall contains a difficult monster (Hidon), but it's weak to Mario's Super Jump. If Goombettes join the battle, use Mario's Fire Orb on them. If you defeat this enemy, you get a Safety Badge. Go northeast through the door.
In this room, you see fish swimming in the water. Go northeast through the door to reach another area with water. Get in the water and go into the whirlpool to be dragged down into the water. You can optionally go through the southwest door to get four Frog Coins from the previous room, then go through the northeast door to return to the room with the whirlpool. While underwater, go northeast through the door.
Go down the stairs and go through the door at the end.
While underwater, go to the cannon against the northwest wall, and go to the right side of that cannon. Walk up against the northwest wall and go northeast to walk behind the barrels. When you reach the corner, go east to go through a hidden door. In the room you reach, hit the chest to get a Safety Ring. Then exit the small room.
Go to the east corner of the underwater area and jump up the barrels to return to the water's surface. Then go west while avoiding the whirlpool, and you'll reach some barrels with a Frog Coin on top. Then go back to the east corner of the room and go northeast through the door.
There will be a cutscene, and you have to fight some Bandana Reds. Afterward, you can hit the treasure chest to get a healing Mushroom. Then go northeast up the stairs, and there will be another cutscene. Afterward, go up the stairs.
You will have to fight more Bandana Reds. Afterward, you can go through the northeast door. After a cutscene, you will battle Johnny.