- Cooper and the One-Armed Man inspect guests at the Great Northern. Hawk finds Harold Smith dead - with a mysterious suicide note and the diary torn to shreds. Leo speaks to Bobby about "new shoes."
- The identity of Laura Palmer's killer is finally revealed after Cooper and Truman's investigation receives some vital help from the one-armed man; finances strain the relationship between Shelly and Bobby; Audrey Horne confronts Ben with what she knows about One-Eyed Jack's; and Leland Palmer tries to discourage Maddy from going home.
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