- It's party time! Everyone in the shire is having a merry time dancing and eating and drinking… as hobbits do.
- Gandalf is setting off fireworks and two trouble making hobbits, Merry and Pippin, get into trouble for setting off a giant dragon firecracker inside a tent.
- Then it's time for Bilbo's speech. He pays homage to all his friends and family in the Shire and then—he's gone.
- Bilbo has said an odd goodbye and slipped away into his home. But Gandalf meets him and confronts him about the ring.
- Bilbo says he will leave it to Frodo, but some things are easier said than done.
- Gandalf becomes stricter as Bilbo becomes increasingly angry and obsessive over the ring. We can see that the ring has warped him.
- Finally, he lets it fall heavily to the ground and departs in good spirits, hoping to live happily ever after.
- Gandalf walks back inside. He barely touches the ring, but there is a flash of a giant orange eye of fire which never bodes well.
- When Frodo arrives he finds Gandalf muttering to himself. Gandalf tells Frodo that the ring (and all of Bilbo's other property) is now his and he must keep it safe and secret. Gandalf is going to go looking for answers.