Preheat the oven to 350°F (175°C). In a mixing bowl, cream together the softened butter and sugar until light and fluffy.

Add the egg and vanilla extract, mixing well. In another bowl, combine flour and baking powder, then gradually add to the wet mixture.

Chill the dough for 30 minutes.

Roll out the chilled dough and use a cookie cutter to cut out watermelon slice shapes.

Place the cookies on a baking sheet and bake for 10 minutes or until lightly golden.

In a bowl, mix powdered sugar, milk, and watermelon extract to create the icing.

Divide the icing into two bowls, tint one green and the other red. Decorate the cookies with the icing to resemble watermelon slices.