I believe I discovered the name of the book in question, it is Terry Jones' Fairy tales, written by Terry Jones and ilustrated by Michael Foreman.

https://www.goodreads.com/book/show/20646.Terry_Jones_Fairy_Tales

I believe I discovered the name of the book in question, it is Terry Jones' Fairy Tales, written by Terry Jones and illustrated by Michael Foreman.

Three raindrops have an argument on their way out of a cloud ...A silly King goes for a walk with a dog tied to each leg ...An enterprising herring, bored of the North Sea, decides to swim right round the world ...Thirty short stories of magic and adventure penned by Monty Python team member, Terry Jones. Embracing the tradition of the fairy tale, but adding Jones' inimitable comic imagination and originality, each story makes a perfect bedtime read for children - and grown ups! 'Could become a 'modern classic' ...the book is a joy' - Brian Patten, "Spectator".

The contents of the book:

• The corn dolly
• The silly King
• The wonderful cake-horse
• The fly-by-night
• Three raindrops
• The butterfly who sang
• Jack One-Step
• The glass cupboard
• Katy-Make-Sure
• The wooden city
• The ship of bones
• Simple Peter's mirror
• Brave Molly
• The Sea Tiger
• The wind ghosts
• The big noses
• A fish of the world
• Tim O'Leary
• The witch and the rainbow cat
• The monster tree
• The snuff-box
• The man who owned the Earth
• Why birds sing in the morning
• The key
• The wine of Li-Po
• The island of purple fruits
• The beast with a thousand teeth
• Far-Away Castle
• Dr. Bonocolus's Devil
• The boat that went nowhere.