The Palooka gang is out of money again, and Knobby and Johnny try to raise some quick cash by selling phony watches. Their first sale is their last, when a burly customer realizes he's been had. Next stop, Joe, Knobby and Punchy load up at a local diner, and Knobby has a scheme to skip out on the bill. Of course, the diner owner turns out to be their watch customer, and the boys make a hasty exit with the manager's waitress girlfriend in tow. Knobby books Palooka into a local vaudeville house to put on some exhibition bouts. Of course, their friend from the diner is in the audience, with a bag of rotten tomatoes, and he's more than willing to come on stage when Knobby asks for a volunteer to box with Joe.

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