For financial statement purposes, if you were never a C-Corporation then you should not have anything in Retained Earnings.
If what is in your account titled "retained earnings" is the net of the income and expenses and all income and expenses are to be split 50/50, then yes, make a journal entry to remove the amount from retained earnings and put it into "Members Equity".
In financial statements you normally do not see each member`s equity account. If you wanted to disclose this information it would be placed in either the notes to the financial statements or a supplemental schedule or both the notes and the supplemental schedule.
Usually, the notes to the financial statements would briefly explain what is worded in your partnership agreement as to how the income and expenses are divided (including non-deductible items, if any) and a supplemental schedule would divide the total member`s equity between each member.
The reason a supplemental schedule is usually used is because when one is requested it is usually to show the difference between the partner`s inside and outside basis.
Gina L. Gwozdz, CPA