This all depends on the format your teacher has for you.
As a shepherd boy watched as the sheep grazed, he let his mind wander and eventually it led to mischief.
What you have to do is connect the words in the outline to form sentences. There are many different ways to do this, but assuming your teacher wants to keep the sentences in the order that the outline is in, then you would write something like the example above. It also does not have to be too complicated.
A shepherd boy watched the sheep graze on the grass. While watching the sheep, he thought of mischief. He climbed a tall tree . . .
I wish you luck!
