Beginning at top edge, with 2 strands of A, cast on 50 sts.
Row 1: Sl 1 purlwise, *k1, p1, rep from * to last st, k1.
Rows 2-8: Rep Row 1.
Row 9 (RS): Sl 1 purlwise, inc 1 st in next st, k to end of row.
Join 2 strands of B, and work Chart Rows 10-60.
When chart has been completed, fasten off B.
With 2 strands of A only, work Chart Rows 61-74.
Sl sts to a holder.
Work same as Front, but do not sl sts to holder. When Chart Row 74 has been completed, join Back to Front with 3-needle bind off.
SIDE (make 2)
Beginning at top edge, with 2 strands of A, cast on 24 sts.
Rows 1-8: Sl 1 purlwise, *k1, p1, rep from * to last st, k1.
Row 9 (RS): Knit.
Join 2 stands of B, but do not end off A.
Row 10: With B, p11, k2, p11.
Row 11: With B, k11, p2, k11.
Row 12: With A, p11, k2, p11.
Row 13: With A, k11, p2, k11.
Rep Rows 10-13 fifteen times, then rep Rows 10-11 once more. End off B.
With A, purl 1 row.
Next Row (RS): With A, purl (foldline).
Next Row: With A, p2tog, p to last 2 sts, p2tog.
Next Row: With A, k2tog, k to last 2 sts, k2tog.
Rep last 2 rows until 2 sts remain. Bind off.
HANDLE (make 2)
With 2 strands of A, cast on 2 sts.
Rows 1 and 3 (RS): Inc 1 in first st, k1b to last st, inc 1 in last st.
Rows 2 and 4: Inc 1 in first st, purl to last st, inc 1 in last st - 8 sts at the end of Row 4.
Row 5: Sl 1 purlwise, k1b across.
Row 6: Sl 1 purlwise, purl across.
Rep Rows 5 and 6 until piece measures about 19 in. (48.5 cm) from beg, end with a WS row.
Next Row: K2tog, k1b to last 2 sts, k2tog.
Next Row: P2tog, p to last 2 sts, p2tog.
Rep last 2 rows until 2 sts remain.
Matching ribbed top edges, sew Sides between Back and Front. Sew shaped end of Side to bottom of Bag.
Pin one Handle to Front, with each end of Handle 2 in. (5 cm) from side edge of Front, and with shaped ends of Handle just below ribbed top edge of Bag. Sew securely to Front. Rep with second Handle on Back of Bag.
Weave in ends.
Wash by machine on a hot wash/cold rinse cycle with detergent and several pieces of clothing to agitate. Keep checking felting progress and remove from machine when very lightly felted. Pull into shape and allow to dry.
By hand, sew ribbon inside Bag, just below top edge to prevent ribbed edge from stretching.
If desired, insert plastic into Bag to create a rigid bottom.