I'm not really sure how it goes; I was actually looking for the words myself. I heard some classmates (I'm in 8th grade) singing it a few days ago and I haven't seen their version up here yet. They played it by sitting down in a circle, palms facing upwards, and slapping each others hands. When it got to the last word the last person to get hit would be out.
As for where this version "comes from", I'm in Missouri but the girl that was singing just moved from California.
Alright, well I'll give it my best to get it right:

Down by the banks of the hanky panky
Where the bullfrog jumps from banky banky
Singing eeps ipes opes opps
[a line that ends in kerplop]
See that house over the hill
That's where me and Garfield chill
Smell that chicken smell that rice
[then there's a line about shooting dice]
[And it ends in something that counts down from 10-1]

If anyone knows the correct words to that particular one, please tell me!