Where is mother's knife?
I've found out the grampa has hidden it, and tried plying him with cupcakes, but I can't seem to locate the knife. Do I need to do something with the towel?
Solution 1:
Give grandpa a cupcake and select "Split it with you"
Note: You have to drag the cupcake onto grandpa. If you select the cupcake dialog when you talk to him, you won't get the option to split it.
Solution 2:
Choose to share the cupcake with grandpa.