To help children learn how to write with dialogue, I choose four-frame cartoons with dialogue bubbles. For beginners, I make sure that the cartoon speakers alternate. I make and use a transparency of the cartoon and make a paper copy for the kids with lines below it.
I model for them how to write a brief introduction that includes the setting and maybe something about what they see happening. We write the dialogue for each speaker’s bubbles and write a conclusion sentence or two at the end. After a few cartoons, they become very capable of using correct punctuation and adding in description to take the place of the pictures in the cartoon. They can then incorporate these skills into their own stories.