Flat Bottom Bag - Knifty Knitter

UPDATED PATTERN COMPLETED!!! I've made another bag and checked the numbers... there were a few things I needed to change. Thanks Trudy for bringing it to my attention! ~CrystalI've created this pattern for a little bag - it's made with the blue Knifty Knitter loom.
This one is made with Lamb's Pride Bulky which is 100% wool- one strand throughout. (Using different yarn does effect the number of stitches needed which might require some pattern tweeking!) I plan to felt it- I'll post pics when it's done.

1. Wrap 10 pegs with the e-wrap method. Knit back and forth on the 10 pegs for 8 rows (*please note that when I do a flat panel on the loom, I don't double wrap the end peg twice- in other words, I skip the first stitch on each row -this means that you will only wrap 9 pegs on each row but use 10 pegs total. This does make a difference- less stitches on the sides which enables you to wrap a lesser amount of side loops without leaving any gaps on the bottom.)

2. Now stretch the stitches across the loom and attach them to the opposite side of the loom. I was easily able to put 8 stitches on the opposite side ... this leaves 3 open pegs on either side.
UPDATE: Bethalice has a great tip here about how to keep track of your stitches to stretch them across the loom! She modified this pattern to make a water bottle holder! Check it out!
3. Pick up stitches from the side panels of the knitted piece and put them on the pegs. Like this...
4. Now e-wrap completely around the loom and knit off. Continue knitting around the loom until the bag is as long as you would like it to be. As you knit along you will see the base of the bag develop into a more boxy shape.

5. When the bag is as long as you would like it to be, wrap the first 11 pegs and knit off. Then, bind off 12 stitches. I used the crochet method. (Remove the first loop with a crochet hook, do 1 crochet chain stitch through this loop. Then, lift the next stitch and pull it through the loop that's on the hook. Do another crochet chain and pick up another stitch, pull loop through the loop. Continue until 12 stitches are removed.)

6. The last crocheted loop is then put on the last peg on a round - this starts the purse flap. (If you start with the peg to the left of the side hook of your loom, this means you will put this loop on the peg to the right of the side hook). It should look like the right picture below.
(NOTE: The flap starts 1 stitch before the pegs that you started with at the beginning--- and ends 1 stitch after -- you had 10 stitches at the very beginning and now you are using 12 pegs)

7. E-wrap the remaining 12 pegs and knit off. Knit 4 rows on the same 12 pegs.

8. Decrease by moving the last stich of the 4th row onto the peg next to it and wrap the 5th row. Knit off. Decrease the next row the same way. Knit 2 rows without decreasing. Decrease the next two rows as before. Knit 2 rows without decreasing. Continue in this manner until you are down to just 5 stitches.

9. Bind off with crochet method as above. With the last single stitch on the crochet hook crochet a chain (I made mine 8 single stitches) Cut the yarn about 5" long and put it through the last chain stitch to end the chain. Then, attach chain to other side of bound off top as in the picture (below right). This creates the loop for the button. Weave in the ends.
Now it's done! YAY! Felt if you would like. Before felting and as shown in picture, the bag is about 3 1/2" wide, with a 2" base, and mine is 4 1/2" high. This bag is a good size for my palm pilot. After felting, hopefully it will be the right size for my cell phone!

**I'm a little protective about my patterns so please don't claim it as your own. You are welcome to use it to make some for yourself and your friends... but please don't claim my words or pictures as your own!**