Pattern:
C/O 82 sts. in MC.  This bag is knit back and forth for ease of patterning.  Knit in stockinette stitch for 1.5 inches.  Place stitch markers on last round:  k 7, place marker, k 28, pm, k 12, pm, k 28, pm, k7.   These markers define the corners of the bag.

Handles:
On the next RS row, k 11, cast off 20, k20, C/O 20, k 11.  Next row, work across, casting 20 sts. back on  where you cast them off in the previous row.

Work another 1.25 inches in MC, then start chart on both large sides of bag, from the top down, using 2 balls of SC for skull and crossbones patter.  Since you are working back and forth, using 2 separate balls of SC means you don’t have to carry yarn across large expanses of MC.

Cut SC when finished with chart, leaving 6 inch tails for weaving in.  Continue knitting plain in MC for another 1.25 inches, ending on WS row.

Mitered bottom:

You’ll be decreasing before and after each marker to create a flat bottom on the bag.
Row 1 (RS row):  knit to 2 stitches before marker, k2tog, slip marker, k2tog, continuing to decrease in this method before and after each marker.
Row 2 (WS row): purl
Row 3 (RS): decrease before and after markers
Row 4 (WS) purl
Repeat rows 3 and 4 until the short sides of bag have 2 and 4 stitches each, ending with RS row.
Next row: Knit the stitch before and after the markers together.

Position your knitting on two needles with RS facing and equal amounts of stitches on each needle.  Do three needle bind off, sew up the side seam, and weave in all ends.

Fulling:  
Throw your finished bag and an old pair of jeans in a washing machine on hot.  Use a little soap.  Keep an eye on things and felt the bag until it’s the size you want.  Mine is about 8″ x 8″.  Air dry it and enjoy!