Plot hole: The tournament that Daniel is in is the All Valley under 18 tournament, but we already know that he has graduated from high school and was about to attend college. His birthday is in December, so he must already be 18.
Daniel goes to the Cobra Kai dojo to tell Silver that he won't enter the tournament, he then discovers that Silver is evil and that Kreese is still alive. Barnes is also there and they are about to beat Daniel to death when Miyagi saves him and wipes the floor with all three of the villains. Daniel defeats Barnes in the final of the tournament.
H.R.H. The King Of The Internet
Daniel Larusso: I know you don't believe in fighting, but tournament karate isn't exactly fighting.
Mr. Kesuke Miyagi: Not exactly ping-pong, either.
Trivia: When Daniel is persuading Myagi to use his college money to buy a store for selling Bonsai trees, he takes a wad of cash, smells it, and says, "Hmm. Looks like money.smells like money." Ralph Macchio has practically no sense of smell at all, so just for fun he always makes a point to smell something in every movie he does.
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