When my daughter breaks something through carelessness (which isn't very often at all) I find an age appropriate job for her and make her work off the cost. I give her minimum wage per hour for her work. So if she breaks something worth 50 bucks, she has to go out and do yard work for seven hours. Of course, she is 14, so yard work is appropriate. You could have your little guy do other things to help around the house. Maybe teach him to dust, help with the laundry, pick up toys, vacuum, clean up the yard or whatever else you think he can handle! I would also insist on no outside and TV until he does make up the cost. I have no idea how much an exercise ball costs (not even sure what it is!) but if it is too expensive, obviously he won't be able to make up the entire cost of the item, but a couple days of housework will indeed teach him a lesson. I don't think I would take the Christmas gift back, though.