Eddie, having failed to study for an important chemistry test, enlists Urkel into colluding to cheat on the exam (through a coughing code).
It almost works, except that on the day of the test Urkel (who easily finishes the test) really does have a cold. A desperate Eddie asks Urkel for the answers, who writes them down... until he's caught by the teacher. After failing to explain the situation, the teacher sends Urkel to the principal's office and tells him he will be recommended for expulsion.
Meanwhile, Carl dozes off on the couch... and wakes up to find everything in the house gone! Carl can't understand what happened, and takes a lot of ribbing from Lt. Murtagh.
Eddie feels bad about what happened to Urkel but would rather leave his friend out to dry, since a confession would expose the fact he didn't study. Laura tells him he'd better confess, especially since Urkel's stuck up for Eddie many times.
So, Eddie and Urkel get ready to explain everything ...
... until the burglars, who had ripped off the Winslows earlier, pump more sleeping gas into the home (to put everyone to sleep so they can finish the job and further humiliate Carl).
Harriette, Rachel, and Estelle arrive home to foil the burglars, and Eddie completes his confession. In the coda, everything's back to normal - the Winslows get their furniture and electronics back, and (after they explain everything to the school adminsitration) Urkel and Eddie must re-take the chemistry test.