According to Jim Recap: No Crime, But Punishment
Gracie is out of control. She just won't listen. So when she is caught writing "boogers" on the bathroom mirror with lipstick (belonging to Dana), it's time that someone puts their foot down. Cheryl thinks that the books are still the way to go. Jim thinks that the books are for stupid people, and something new needs to be tried. He suggests that Gracie has to clean the mess in the bathroom while he eats candy in front of her. Andy agrees, but he would make one change - he wants to eat in front of her too.
Unfortunately, that doesn't help. Or at least they don't think it does. When Jim and Andy are at the store, they "catch" Gracie eating a candy bar that she says was given to her by the Pink Balloon lady. Thinking that she made it up, they promptly tell her that she is grounded for a month. When they get home, Cheryl informs Jim that the Pink Balloon is where the girls get their hair cut, and the lady there gives out candy. Jim still thinks Gracie should be punished.
What kid doesn't eat their candy when they get it? And she is probably guilty of something. But he agrees that they should apologize and tell Gracie that she isn't grounded for a month. So he and Cheryl go up and talk to Gracie, and tell her that they are sorry, and that the next time they will believe her. Wouldn't you know it - the next time happens sooner than they would have thought.
When Dana brings the kids home from the park, Jim finds a video game in her jacket. Gracie says that her friend Annie gave it to her. But she doesn't know Annie's last name, and she thinks she came from Jupiter. Only now Cheryl made Jim say that they would believe her the next time she told them something, so he can't punish her! Instead, they decide to trap her.
So everyone goes to the park the next day to see if they can meet this "Annie". Andy spies on Gracie from a bouncy horse, and promptly gets hauled off by a policeman. Jim crawls into a tube on the jungle gym and finds out that sure enough, there is an Annie, and she did let Gracie have the video game. Drat! Who would have thought it?
