Thank you for your response. As you suggested, I am treating it as pick up sts and the bear's bottom is beginning to take shape.
Could you clarify one more thing, please.
The side where I picked up sts from the knit (RS) looks very nice; but on the purl side (WS) the picked up sts look a bit rough.
Could you describe the process of picking up sts purlwise so I can ensure I am doing it right?