Cooper takes breakfast at the Great Northern Hotel, enjoying a "damn fine cup of coffee" as Audrey Horne comes over to his table, introduces herself, and begins flirting with him. He asks her about Laura Palmer, and she informs him that Laura tutored her brother Johnny.
Cooper makes his way to the sheriff's department, where he and Sheriff Truman discuss the day's plans. They interview Dr. Hayward, who has had an autopsy conducted on Laura's body. They learn that Laura had had sex with at least three men the night she died. Dr. Hayward has no doubt that the still-comatose Ronette Pulaski witnessed the crime, but he is still unsure as to when she could become responsive.
Shelley is about to leave for work when her abusive husband Leo demands she does more laundry. She finds a bloodstained shirt among Leo's clothes and hides it before he notices. However, he later realizes that it has gone missing. When she returns home that night, he questions her about its whereabouts, and angry that she has lost it, he savagely beats her with a bar of soap in a sock.
Cooper interviews James about a video of Laura and Donna; Donna had denied him being present the day it was taken, but Cooper noticed a reflection of his motorcycle in the video. Cooper confronts James about the affair he was having with Laura, and about her cocaine habit. James admits to their having been in a relationship, saying that it was Laura's idea to keep it secret. He also admits to having seen Laura the night she died but denies killing her. Cooper then presents James with the half of the heart necklace found at the crime scene, and James says he recognizes it. However, he claims not to know who has the other half. James' uncle Ed comes to the sheriff's department to pick his nephew up. Ed tells Truman that he was drugged before the bar fight the previous night at the Roadhouse; he suspects bartender Jacques Renault was responsible. Cooper takes a telephone call from his colleague Albert Rosenfield, who is on his way to aid the investigation.
Meanwhile, Bobby and Mike are still in jail, discussing the money they owe to Leo. The $10,000 they were meant to pay him for a supply of cocaine was in a safe deposit box owned by Laura, but the cash has now been discovered by Cooper and Truman and taken as evidence. They are later released by Cooper, who sternly warns them not to approach James.
Donna wakes up and goes to her mother, wondering why she was not woken up earlier to be at the sheriff's station. Her mother says it was decided to let her rest, and Donna explains her feelings over the previous day, including her new love affair with James.
Josie and Pete discuss Josie's trouble with Catherine. Truman and Cooper arrive to speak with Josie, who had employed Laura as an English tutor. Josie admits to sensing that Laura was troubled but cannot help further. During the conversation, Cooper picks up on the fact that Truman has been having a relationship with Josie.
Catherine calls Josie to tell her that the latter's sawmill lost $87,000 the day before. Catherine is revealed to be having an affair with Benjamin Horne, and the two are plotting a hostile takeover of the mill. That same day, Donna visits Laura's mother Sarah, attempting to console her. However, Sarah suddenly she sees Laura's face in place of Donna and has a vision of a sinister man crouching in the corner of the room and panics.
At the hospital, Deputy Hawk questions Ronette's parents about their daughter's activities on the day of the murder. During this, he spots a strange one-armed man walking the halls of the hospital and follows him to the morgue, but quickly loses track of him.
At the Double R Diner, Truman and Cooper discuss what they know so far. Cooper decides on trying some of the local cherry pie and praises it to the skies. Cooper also introduces himself to Norma, whom he asks about the Meals on Wheels program that Laura helped organize. He also briefly talks with the Log Lady, who tells them that her log saw something the night Laura was murdered. When Cooper asks what it is, she asks him to direct the question to the log itself. Cooper puzzled by her request, doesn't do so, and the Log Lady declares that he is not ready to know yet and leaves.
Meanwhile, Dr. Jacoby sits in his office and begins listening to a tape made for him by Laura and begins crying and sobs as he toys with half of a golden heart necklace, the other half of which was found at the scene of the crime.
Tropes:
- Broken Pedestal: Laura's cheating, sexual habits, and cocaine use come out during this episode. Sheriff Truman and Doctor Hayward are especially shocked.
- The Dog Bites Back: Shelly hides away a blood-soaked shirt of Leo's, hoping it might be evidence against him.
- Domestic Abuse: Leo Johnson engages in this with his terrified wife Shelly. Specifically, he beats her using a bar of soap in a sock.
- Good Is Dumb: Laura Palmer comments on both James' decency and stupidity via recordings of her psychology sessions.
- Hypocrite: Bobby and his best friend Mike Nelson are furious at Donna being involved with James despite the fact the former cheated on his girlfriend with a married woman.
- Mind Screw: Mrs. Palmer seeing BOB and Laura in Donna's face. May be an example of Psychic Powers.
- Unequal Pairing: Doctor Jacoby is clearly in love with Laura Palmer and may have had an affair with her. He is also her psychiatrist and at least twice her age.
