Balance of share forfeiture account is shown in the balance sheet under the item:

When shares are forfeited due to non-payment of calls, the amount already received from defaulting shareholders is credited to Share Forfeiture Account. This represents money retained by the company from those who failed to pay the remaining amount.

In the Balance Sheet prepared as per Schedule III of the Companies Act, 2013, the Share Forfeiture Account balance is shown under the main head "Share Capital" on the equity and liabilities side.

The presentation format is:

Share Capital:

• Authorised Capital: xxx
• Issued Capital: xxx
• Subscribed and Fully Paid Capital: xxx
• Subscribed but not Fully Paid Capital: xxx
• Less: Calls-in-Arrear: (xxx)
• Add: Forfeited Shares (Amount originally paid up): xxx

The Share Forfeiture Account is added back to arrive at the total Share Capital because it represents amounts that legally belong to the company after forfeiture.

Why not other options:

Option 1 (Current Liabilities): Share forfeiture is not a liability as the company doesn't owe this amount to anyone.

Option 2 (Reserves and Surplus): It becomes a reserve only when it is transferred to Capital Reserve after adjustment for discount on reissue. Until then, it remains part of share capital.

Option 4 (Unsecured Loan): This is clearly not borrowed money.

Therefore, Option 3 is correct - Share Forfeiture Account is shown under Share Capital.