Now we have to merge down all the layers (shift+ctrl+e) and distort the new layer that we've got, making use of Filter ? Distort ? Wave. We have to mark out the layer, just not to blur out the edges too, Select the Rectangular Marquee Tool for the necessary markings:





We should change now the illumination. Selecting the next option Filter ? Render ? Lighting Effects, it's possible to create two light's sources (the second one - by pulling the lamp indicator).



The next instruments: Crop Tool and Rectangular Tool will help us to insert the picture in a frame: