droped phone in water

1) You could have clogged the mic hole with something that was in the water, or you could have blown something on the motherboard, or a dozen things in between. The only way to find out is to take it into a shop and get a repair estimate.

2) The proper procedure for a wet phone is to IMMEDIATELY remove the battery (I don't care if you have to break the back cover off to do it - back covers are cheap even on phones with non-removable batteries). Then WASH the phone in alcohol, plain old rubbing alcohol. (Alcohol isn't water, it's hygroscopic, it absorbs water.) Put the phone into a non-metallic container (a glass meat loaf pan is about ideal, and swish it around in the alcohol vigorously for about 5 minutes. (You're trying to wash all the minerals and dirt that were in the water out of the phone. And yes, even rain water can destroy a phone - it's acidic and dirty.) After 5 minutes, dump the alcohol, drain the phone, and do it again with fresh alcohol. Do this a total of 3 times. (In my shop, we'd disassemble the phone completely, dumping each part into an alcohol bath. Then, when it was completely disassembled, we'd take each part and scrub it [how hard depended on what might break] with a gauze pad, sometimes wrapped in a toothpick end. Then rinse the part off in clean alcohol.)

Then give the battery a good wipedown with alcohol. Most of it is plastic, but the terminals aren't, and there may be a few more little metal pieces.

Now put the whole thing - phone and battery (separately, don't put the battery into the phone) - into a container of uncooked rice and leave it there for about a week. (Silica gel is better, but you have to have a freshly-baked supply when you need it. It absorbs water so well that in rainy weather we'd bake a couple of small batches about every other day to make sure we had some dry gel.)

At that point, if you put the battery back into the phone, you have about a 50% chance of having an undamaged phone. It depends on how wet it got, with what (dump it into ocean water and don't waste your time - toss it), and how quickly and how well you got it clean.

Cheapest way to prevent the problem if you're going to be near water - put the phone in a zip-lock bag and zip it shut. Put that into another zip-lock bag - but upside down - and zip that shut. You can still use the phone that way and, if it falls in the water, who cares? Ten cents of insurance for a $500 phone? Seems reasonable to me.