Laura's beloved horse, Bunny, has officially been returned to her. She eagerly prepares to enter a local race. Jealous, Nellie throws a tantrum until Harriet agrees to buy her a thoroughbred -- without Nels' approval. Although Nellie and her horse are expected to win the race, Laura perseveres with her training. The stakes are higher than ever when Harriet donates a lavish prize for the winner.

On Halloween night, Laura and Mary get permission from their parents to walk into town and pull a little prank at the Mercantile. Laura's imagination runs wild when she peeks into the Olesons' window and witnesses Nels committing an unspeakable crime. Scarred by what she has seen, Laura can't get anyone to believe her.