Place a clean, dry, lint-free cloth over the water stains. This prevents the wood from scorching or getting heat marks.
Preheat your iron to its highest setting. Place the iron on the cloth and let it sit for about five seconds. Don't leave it on any longer, or you may further damage the wood finish.
Check the water stain. It should have lightened from the heat. Repeat the process until the water stain is gone. If the stains have soaked into the wood beyond the finish, refinish the wood.
Sand down the old finish with 100-grit sandpaper. If the wood’s surface is broad and flat, use a handheld orbital sander. Otherwise, use a sanding block or sanding sponge. The latter is especially good for getting into small areas or intricate designs. If the wood is not stained or sealed, skip this step.
Wipe away the dust. Mix 4 ounces, about one-half cup, of oxalic acid crystals into 1 gallon of hot water. Stir it until the crystals dissolve completely. Dip a scrub brush into the solution and use this to scrub the wood. This bleaches the wood and removes remaining water stains.
Restain the cedar wood with a stain of your choice. Dip a cloth into the wood stain and rub the stain into the wood, working with the grain. Let the stain dry.
Seal the stained cedar wood with a wood sealer, such as polyurethane, varnish or shellac. Each type of sealer has different application instructions, which also vary by manufacturer. See the product label for detailed information and directions.