I knit a giant rectangle with the length three times the width. Then folded in ends and sewed two seems up sides with mattress stitch. I cast on 38 stitches for width. Measured 12″ and then knit for 36″ length.
Garter stitch (knit both sides) for entire thing. Then made handles with casting 9 stitches and knit stockinette stitch (knit 1, purl 1). For 7″ length.
I sewed the handles to the tips of the bag.