Directed by: John G. Avildsen
Starring: Elisabeth Shue, Ralph Macchio, Pat Morita, Martin Kove
Daniel is doing fine in the tournament until one of the dastardly Kobra Kai kicks him in the knee, after which he cannot fight. In the locker room, Mr. Miyagi pronounces the evening successful in that Daniel showed he wasn't a coward. But Daniel craves ultimate victory and pleads with Mr. Miyagi to use his reiki/hands healing on his knee so that he can rejoin the fray. His mentor relents and, in the final combat, Daniel wins the match with a cleanly delivered one-legged flying kick to Johnny's face. Smiles all round.
Jason Feng
Continuity mistake: We first see from the inside of the door (and therefore backwards) the instructions that Mr. Miyagi leaves for Daniel to paint the house. In the next shot we see the same note from the outside - from Daniel's viewpoint. Clearly they are two different notes. The left & right arrows switch directions, the drawings of the hands change, the position of Miyagi's signature changes, and the placement of some of the exclamation points changes.
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Answer: Daniel's wounds came from fighting the Cobra Kai guys but he tells Miyagi that he was injured falling off of his bike. Miyagi sees through this and sarcastically says that he's lucky his hand wasn't hurt.
Damian Torres
I think he was also subtle letting him know he knew he didn't really fall off his bike because if he had, he would have at the very least scraped his hands...especially if he fell hard enough to cause that much damage to his face.
He was still trying to hide it. However, if you fall, you instinctively put out your hands, and they would be scraped up. Miyagi, older and experienced in life, knew better, but Daniel wasn't going to admit it outright.