Drummond and Mr. Ramsey learn the truth about Mr. Horton, the seemingly friendly bicycle shop owner with a very sinister side. It soon becomes a race against time to get details out of Arnold after learning that Dudley is about to become Mr. Horton's latest victim.
Kimberly impresses professional skater Dorothy Hamill with her ice skating, and is taken under her wing. But Kimberly is overwhelmed by the hard work it takes to become a professional skater, and devises a way out.
Arnold, realizing that Kathy is struggling to fit in at public school, encourages her to become hall monitor. He quickly realizes that he has created a monster when she begins to take her job too literally.
As a reporter for the school newspaper, Arnold learns that drugs are being sold on school grounds. This attracts the concern of First Lady Nancy Reagan, who comes to the school to talk about her anti-drug campaign.
After appearing on TV for giving a huge donation to charity, Drummond is threatened by extortionists. Instead of giving in to their demands, he tries to catch them in the act by hiring a bodyguard who turns out to be the female version of Mr. T.