Using a 1/4" seam allowance, stitch the side seams, leaving the 1" area between the red dots un-stitched. Backstitch where you stop and start stitching to reinforce the seam.
Press the seam open, clipping the seam allowance at the fold.
Apply a seam finish to the seam allowance raw edges.
How to Sew a Seam
Choosing a Seam Finish
Sew a Bottle Gift Wrap Bag
By Debbie Colgrove, About.com Guide
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