How do I approach translation of a latin sentence?

You shoud:

1. Read the sentence in its entirety, up to the full stop.

2. Proceed to analyse how the period is constructed: which is the main sentence? Are there any sentences subordinated and/or coordinated to the main? 

3. Define the verb of each singular phrase you find in the sentence.

4. Analyse what every single word is. E.g. Ibam: first person singular of the Imperfect Indicative, from the verb eo, to go. 

5. Establish the relationships between nouns, adjectives and prepositions. 

6. Try to provide a translation.

E.G: 

Puellae cum pila ludunt et laetae sunt.

We have here two sentences: 1. Puellae cum pila ludunt. AND 2. Laetae sunt.

The two are coordinated by the conjuction ET. 

In the first phrase we see:

Puellae: nominative, feminine, plural, from Puella, ae, 1st declension. (Pay attention that the same form can be either a genitive feminine singular or a dative, feiminine, singular).

Cum: preposition which usually accompanies an ablative or dative.

Pila: ablative, feminine, singular, froma Pila,ae, 1st declension ( it can be even a nominative singular, but it is following the cum, therefore it can be ablative and form an instrumental ablative).

Ludunt: third person plural, present, indicative, active, from Ludo, -is, lusi. lusum, ludere. Verb of the first phrase.

et: coordinative conjuction. Introducing a new phrase.

Laetae: nominative, feminine, plural, from the adjective laetus,-a,-um. (it can be either genitive or dative feminine singular, but we can imagine that it goes with the Puellae, sinche there are no other nouns in the same case the adjective can depend upon.)

Sunt: third person plural, present,indicatuve, from the verb sum, -es, fui, esse. ( the presence of verb sum in the function of copula explains the adjective laetae and reveals puellae as implied subject.). Verb of the second phrase.

Of course, during this analysis it is necessary to use the vocabulary as to search every word! And to put everything in good English.

Here it is the translation:

The girls (puellae) play (ludunt) with the ball (cum pila) and (et) they are (sunt) happy (laetae).

Good Job :-)