Cut any jagged edges on the outer rim of the hole with the small utility knife. Run your finger on the edge of the hole to make sure it's smooth.
Cut into the hole slightly to create a small indentation.
Apply a coat of drywall about 1/8 inch thick over the hole using a putty knife. Let it dry.
Scrape the surface of the dried drywall compound with the putty knife until the coat is smooth.
Apply another coat of drywall compound. Let it dry and scrape the surface smooth again.
Continue to apply coats of drywall compound until the coat is higher than the wall surface. Let them dry.
Sand the drywall compound down until it's smooth and level with the wall.
Paint over the drywall to match the rest of your wall's color.