Bilbo is sitting by himself and staring off into the distance. Gandalf comes to join him. They sit there, quietly, thinking. Gandalf begins cleaning out his pipe quite noisily, and Bilbo looks like he's about to object. After a moment's pause, they nod at each other. The remaining members of Thorin's company kneel beside the body of their king, paying him homage. Bilbo and Gandalf, sitting, watch them. They looked for the king's queen who was also their Queen and their Guardian. But, they found her body next to her nephew Kili. Dwalin and Balin run towards her, seeing that she was breathing and her eyes were open. They shout "Thyri !" The others, Bilbo and Gandalf reached them and saw tears falling from her eyes. She looks at Kili with remorse "Forgive me, Kili. I wasn't well enough to be up to the task of protecting you and your brother. Your old auntie wasn't fast enough to save you two. I would have liked so much to know about you more. But I was able to know an important thing about you two. You were exceptional nephews. I wouldn't have wished for the better. My little wolf and my little lion." The Company looks at her, with teary eyes. Then, she looks at them, smiling sadly "It was... a privilege to have this journey with you lads. I was so happy to reunite with you, Dwalin and Balin. My old friends. Erebor is in good hands with you all and with Dain as King. I can finally rest in peace. Bilbo, come near me please." Bilbo approaches her, kneels down next to her, and holds her hand. She tells him "Thank you for staying until the end. You are... the bravest Hobbit that I have ever met. I would have wished to know about the Shire and Bag-End." Bilbo lets out tears and says "Do not say that. There's still time for me to tell you everything about the Shire." Thyri chuckles softly before coughing. She says "My friend... it's too late. I cannot survive without my twin." Bilbo puts the necklace Thorin gave him on Thyri's hand. She hands it back to him and says "Keep it. This necklace... I give it to you as a token of appreciation... for being a great friend." Thyri takes her last breath to say to Gandalf in his mind "Protect Bilbo from the Ring, old friend." She looks at the clear sky, smiling; then, shuts her eyes slowly. The Company, except Gandalf, kneels before their Queen. Gandalf lets out tears. He lost one of his closest friends whom he admired profoundly and whom he considered his student. Later that day, in Dale, Percy blows on a huge horn, and all the townspeople, who are gathered along the walls, stare out reverently at Erebor.
The Company, Gandalf, Beorn, and Radagast ended up in Erebor for the funeral of the four Royal Family members. The four fallen members are lying on stone tables, holding their respective swords on their chests, except for Thorin holding the Arkenstone.
The Company pays its respects to them. Gandalf says his eulogy for the fallen members, more particularly for Thorin and Thyri :
"The King and the Queen have come unto their own
Under mountain, under stone.
Send them now into the deep,
Unto earth, eternal sleep.
Under mountain, under stone,
Through all lands let it be known:
The King and the Queen are dead !"
Balin raises his sword towards Dain and shouts "Long live the King !" The others from the Company do the same thing and shout "Long live the King !" All of the Iron Hills Army, who is behind Dain, repeat the gesture as Dain bows his head in respect to his fallen family members. Bilbo and Balin walk out of the gates of Erebor. Bilbo is wearing his pack and is prepared to leave. Balin tries to persuade him to stay "There is to be a great feast tonight. Songs will be song, tales will be told and Thorin Oakenshield and Thyri the Dragonslayer will pass into legend." Bilbo says "I know that's how you must honor them, but to me they were never that. They were... to me... they were..." He is unable to find the words, and Balin smiles fondly at him. Bilbo asks "Well, I think I'll slip quietly away. Will you tell we others I said goodbye ?" Balin says "You can tell' em yourself." Bilbo looks back and smiles as he sees the other dwarves standing behind him.
He speaks to all of them "If any of you ever passing Bag End, tea is at four, there's plenty of it. You are welcome anytime." The dwarves bow to him.
And he smiles. He begins to turn away, then turns back "Eh, don't bother knocking." The dwarves chuckle, some of them wiping away tears. Bilbo, after waving goodbye, walks toward Gandalf, who is waiting with his horse and a pony for Bilbo. They ride slowly back toward the Shire, admiring the scenery as they go. They dismount at the edge of the Shire, and Bilbo begins to walk with all his things in his arms. Gandalf says "Ah, the borders of the Shire. It is here I must leave you." Bilbo tells him "That's a shame. I quite liked having a wizard around. Seems they bring good luck." Gandalf asks "You don't really suppose, do you, that all your adventures and escapes were managed by mere luck ?" Gandalf looks knowingly at Bilbo "Magic rings should not be used lightly, Bilbo." Bilbo begins to protest, but Gandalf interrupts him "Don't take me for a fool. I know you found one in the goblin tunnels... and I've kept my eye on you ever since." Now that the secret is out, Bilbo smiles "Well, thank goodness." He raises his hand "Farewell, Gandalf." They clasp hands and look each other in the eye. Gandalf says "Farewell." Bilbo turns and walks away; after a few paces, he stops and turns "You, uh... you needn't worry about that ring. It fell out of my pocket during the battle. I lost it." Gandalf tells him "You're a very fine person, Mister Baggins. And I'm very fond of you. But you're only quite a little fellow in a wide world after all." Bilbo continues walking back to the Shire, and Gandalf goes back the way he came. As Bilbo climbs over the last hill before Hobbiton, he sees a lot of activity near Bag End, across the valley. As he walks up the path toward his house, he sees many hobbits passing in the opposite direction as him carrying various articles of furniture and other household articles "Wait a minute... that's my mother's glory box. And that's... my dining chair." He sees a hobbit carrying a pouf on his shoulder "Ah ! Put that pouf down ! What is going on ?!" A hobbit with a wheelbarrow full of things stops to greet him cheerfully "Hello, Mister Bilbo !" Suddenly, he realizes who he is talking to and looks surprised "...You're not supposed to be here." Bilbo asks "What do you mean ?" The hobbit replies "On account of you being presumed dead and all." Bilbo says "I am not dead ! Presumed or otherwise !" He turns and hurries up the hill toward Bag End, passing more and more hobbits carrying his things. The hobbit says "I'm not sure that's permitted, Mister Bilbo !" In front of Bag End, and auctioneer is auctioning off Bilbo's things. A sign reads: "For sale, by auction. The effects and estate of the late Mr. Bilbo Baggins, esq. 10 o'clock sharp, June the 22nd. Messrs Grubb, Grubb and Burrowes. Registered Auctioneers." The auctioneer says "Twenty-one ! Haha ! Sold to Mrs Bolger ! Somewhere for Fatty to put his feet on, haha ! Do I have any bids for this ? This is Shire-made. None of your dwarvish reproductions here. Our next bid..." Bilbo, running up, interrupts him "Stop ! Stop ! There's been a mistake !" A female hobbit asks "Who are you ?" Bilbo says "What do you mean who am I ?! You know bloody well who I am, Lobelia Sackville-Baggins ! This is my home ! And those are my spoons. Thank you very much !"
He takes back some spoons that Lobelia had just bought at the auction. The auctioneer asks "This is most irregular. Excuse me, it's been more than thirteen months since the disappearance. If you are, in fact, Bilbo Baggins and undeceased, can you prove it ?" Bilbo asks "What ?!" The auctioneer replies "Oh, well, something official with your name on it would suffice." Bilbo is, justifiably, quite flustered "Alright ! Right." He pulls out the contract that he'd signed to join Thorin's company and looks through it "A contract... of employment as a... a... nevermind as what." He shows it to the auctioneer "There ! My signature !" The auctioneer says "Uh, certainly seems to be in order. Yes, seems there can be no doubt." As the auctioneer is reading, Bilbo mounts the steps to his house. The auctioneer asks "Who is this person you pledged your service to ?" Bilbo pauses at the door. Auctioneer asks "...Thorin Oakenshield ?" Bilbo looks sad "He- he was my friends."
Opening the door, Bilbo walks in to find his house a mess, with items strewn all across the floor. As he walks about, he finds a handkerchief with his initials, BB, on it. He looks up and smiles. Finding a picture of his mother on the floor, he puts it back up on the wall next to the picture of his father. He straightens it out. He steps back and looks at it. As he inspects his handiwork, he puts his hands in his waistcoat pocket, but then pulls them out quickly when he feels his ring. He hesitates to put his hand back in his pocket, going back and forth. Eventually, he pulls it out and looks at it. We see the hand holding the ring. It is now much older. It is the present time now, and Bilbo is quite old. A knock sounds at the door, and Bilbo clutches the ring tightly. He yells out "No, thank you ! We don't want any more visitors, well-wishers or distant relations !" The voice of Gandalf is heard from outside "And what about very old friends ?!" Bilbo smiles broadly and hurries to open the door. We hear him and Gandalf talking in the background as the scene is to one of Bilbo's maps of Middle Earth, eventually centering on the Lonely Mountain. Bilbo asks "Gandalf ?!" Gandalf says "Bilbo Baggins." Bilbo says "My dear Gandalf !" Gandalf smiles "Good to see you. One hundred eleven years old, who'd believe it ?" Bilbo smiles back "Come on, come in ! Welcome, welcome !" Dear Bilbo kept the Map in a frame. The one who helped find the Secret Door of Erebor. The one who had allowed Thorin Oakenshield and Thyri the Dragonslayer to reclaim their birthright.
Dear Bilbo also kept Thyri's necklace around his neck ever since she gave it to him. This necklace which gave Thorin the hope of finding his sister alive and well. This necklace will be given to young Frodo when he will embark on the Quest of Mordor.