To make the basket, dust a surface with confectioner’s sugar and roll out the medium-brown fondant to 1/8 in (3mm) thick. Using the sharp knife, cut a basket shape—5in (12cm) at the top, 4in (10cm) at the bottom, and 3 1/2 in (9cm) high. Wrap the remaining fondant in plastic wrap for later use.
Using the blade tool, score horizontal lines across the surface, leaving about 1/2 in (1cm) unscored at the top of the basket. Score a series of diagonal slashes on the top of the basket and set aside to harden.
For the teddy bear, mold a walnut-sized ball of light-brown fondant for the head, and two tiny balls for the ears. Flatten the ears with your fingers, and create cavity. Roll out a ball for the muzzle and flatten slightly. Attach the ears and muzzle to the head. Create eye sockets using the end of a paintbrush. Make the eyes and nose out of the dark-brown fondant, and place on the face. Set aside while you make the hands. [Caption: Attach the ears and muzzle to the head with a little water. Roll three tiny balls of dark-brown fondant for the eyes and nose. Moisten the nose with a little water and attach to the face above the muzzle. Use the end of a paintbrush to create a cavity in the ears.]
Form a small sausage of the light brown fondant for the waving arm, shaping a found paw. Shape a second paw to peep over the basket. Using the blade tool, score lines on the paws, and use the piping tip to score a circle on the waving paw.
Use the toothpick to create stitch marks that run from the nose to the back of the head, between the ears. Attach the heads and paws of the teddy bear to the basket using a little water. Let dry overnight. [Caption: Use the Dresden tool to score a smile on the muzzle.]
Dust a surface with confectioner’s sugar, roll out the yellow fondant to 1/8in thick, and cut three circles. Repeat to cut three orange, three green, three purple, three bright-blue, two red, two fuchsia, and five pale-blue circles. [Caption: use the circular cookie cutter to cut out fondant circles.]
Use the palette knife to smooth a thin layer of buttercream frosting on the cupcakes, about 1/16in (2mm) thick and not quite covering the surface. Moisten the backs of the fondant circles with a little water and press onto the cupcakes. Use the fondant smoother to create a smooth top.
To make the sky, use the small piping tip to pipe little dots of royal icing close together on the blue cupcakes to form cloud shapes. Pipe a border around them using the same tip. Let set before serving. Arrange the cupcakes on a board or cake plate.
Mini Balloon Cupcakes Create miniature balloons to sit on top of cloud cupcakes for an extra treat. Simply dip cake pops into white candy melts, or melted white chocolate, and then quickly roll in a bowl of sprinkles. Press three or four toothpicks (taking care to snip off the sharp ends) into each of the candy-covered pops, and let set. Once hard, invert and press into the cloud cupcakes (see step 8). You can also create balloons from cake pops dipped in a variety of brightly colored candy melts to liven up your display. Or make some tiny fondant teddy bears or baskets to sit under the balloon.
This kids' birthday cake recipe is excerpted with permission from <a href="http://amzn.to/1uhmeAb">"Step-by-Step Kids' Birthday Cakes"</a> by Karen Sullivan and from DK Publishing.