Cut all damaged paper from the drywall with a drywall knife. Neatly cut around the perimeter by tilting the blade to cut through the paper at an angle. Cut down to the first undamaged layer of paper and gently peel any loose fringes leaving the wall solid.
Seal the exposed gypsum core by brushing on a coat of primer-sealer. Be sure to shake the can well before applying the sealer. Brush on two thick coats of primer-sealer, letting each coat dry for an hour. Let the final coat dry completely.
Flatten down any raised fibers by going over the damaged area with a joint knife. Go over the area twice with the joint knife in a downward motion.
MIx setting-type joint compound according to the manufacturer's directions.
Spread several skim coats of joint compound with a joint knife over the damaged area and into the surrounding area, leaving 1/8-inch of excess compound, or mud, over the area.
Skim off mud with the joint knife by holding the knife at a 30 degree angle and pressing down firmly, being careful not to dig into the wall. Remove excess compound into a mud pan and continue skimming off excess mud in continuous parallel strokes. Let the mud dry for 30 minutes.
Scrape off any ridges with a joint knife using upward strokes. Then sand any rough patches with medium-grit sandpaper. Gently wipe off excess debris with a damp rag.
Apply a final coat of joint compound with a joint knife. This time, apply the mud in the opposite direction from the previous application. For example, if previously applied with horizontal strokes, apply this time using vertical strokes. Let it dry.
Scrape off any ridges with the joint knife and lightly sand the surface to leave it smooth and even. Wipe down with a damp rag.