According to Jim Recap: The Lemonade Stand
When Ruby and Gracie want new scooters, Jim tells them that scooters are expensive, so they need to do something to help out with the cost. Why not do what lots of other kids have done before them - try a lemonade stand? So Ruby and Gracie set up a card table out front, and start charging for some lemonade on a hot day.
When the neighbors come by to congratulate them on their enterprise, they look down their nose at the fact that they are using instant lemonade mix, rather than fresh squeezed, and promptly head back over to their side of the hedge to set up their own stand, using freshly squeezed lemonade (which Andy buys). Game on.
Before anyone quite knows what is happening, it's dog-eat-dog in a game of one-upmanship to see who will own this block, and the men are manning the drink stations, offering not just lemonade, but hot drinks as well. The wives are brining out baked goods, and then the stakes get really serious.
There are inflatable bouncy playsets for the kids, pony rides (Andy likes these too), massages, car washes - which have a barely-clothed Andy soaping up cars in a really disturbing sort of nearly gay porn that probably isn't going to help with anyone's appetite. And then the wives have a behind-closed-doors meeting to see if they can talk some sense into their husbands. Unfortunately, that doesn't work out very well, and it's really on.
But that's when the police show up, because a concerned neighbor reported all the goings-on and wanted someone to check into what was happening. That's when Jim gets in trouble for not having a permit for his operation - but the neighbor just so happens to have one, so it seems that we know who reported this little incident.
At the end of the day, after paying off everyone and settling up with the city, there are a few dollars to be made. But it's not even close to enough for the scooters. Feeling bad that he let things go this far, Jim offers to pay the difference for the girls, but they say that they want to have another sale and raise their own money - but this time, no parents allowed!
