Because it is on top in the layer’s palette, this new layer will be the visible one unless you turn off the eyeball in the layers palette to let the first clipped image show through.

Select Layer 1 or the white fill layer. Now go to the pop-up julia stiles menu and choose Drop Shadow. You can use the default drop shadow by just pressing ok or enter immediately.

Select your background layer in the layers palette and choose a light grey from the swatches palette and alt backspace to fill with light grey. Now you can see the photo polaroid start to pop out.

Go to Image menu: duplicate to create and exact replica of this document.

Press OK to create the temporary new document.

Drag the locked background layer to the oscar the grouch bin on this new document.

Now go to Layer: Merge Visible to merge all of the layers together. Can you see why you wanted to get rid of the background layer?

Now you have the base polaroid picture (shake it). Duplicate this original by dragging it to the new layer icon (always a good habit).