The fabric has a nice frayed edge so there was no need to finish the hem and it shirred up perfectly. To add the sleeves I just cut off the sides at an angle. I had read somewhere that you just cut right through the shirring. I have to admit I had little faith and held my breath as I cut but it worked fine. I did end up finishing the cut edge with a tight zig zag stitch to make it more durable for my busy little baby.
The sleeves are made from a doilie I found at the thrift store with some bias binding along the cut edge.
And here is my sweet girl playing with one of our newest pets.