Place 1/4 cup of the frosting in a small microwave-safe bowl; set aside. Tint half of the remaining frosting with blue food coloring. Frost half of the cupcakes with blue frosting. Use blue gel to pipe waves onto blue frosted cupcakes. Frost the remaining cupcakes with white frosting; sprinkle white cupcakes generously with crushed vanilla wafers to resemble sand; set aside.
For beach balls, microwave the 1/4 cup frosting on 100 percent power (high) for 10 to 20 seconds or until melted. With a fork, dip doughnut holes into melted frosting, turning to coat. Place on waxed paper; let dry. For panels on the beach balls, unroll fruit leather and cut eight 3x1/2-inch rectangles, tapering short ends to a point. Place four strips on each coated doughnut hole to look like beach balls. Set aside until set.
For beach towels, unroll and cut the remaining fruit leather into 3x2-inch rectangles. If desired, cut fringe at the short ends of rectangles. Roll up the rectangles so they resemble towels.
For flip-flops, separate peanut butter sandwich cookies; scrape off filling. Use filling to attach two short pieces of licorice lace on smooth sides of peanut butter cookies to look like flip-flops.
Arrange beach balls, beach towels, flip-flops, and ring-shape jelly candies on platter with cupcakes. Makes 24 (2-1/2-inch) cupcakes.