Under which sub-head in the balance sheet does the balance of share forfeiture account appear?

When shares are forfeited due to non-payment of calls, the Share Forfeiture Account is credited with the amount already received from the defaulting shareholders.

The balance of Share Forfeiture Account represents the amount received from shareholders whose shares have been forfeited but not yet reissued. This amount is neither a reserve nor a liability - it is essentially an adjustment to the share capital of the company.

In the balance sheet, Share Forfeiture Account appears under the main head "Share Capital" and is shown either:

• As a deduction from Called-up Capital, OR
• As an addition to Paid-up Capital (subscribed and fully paid)

The typical presentation format is:

Equity and Liabilities

• Share Capital
  • Authorised Capital: ₹XX
  • Issued Capital: ₹XX
  • Subscribed and Paid-up Capital: ₹XX
  • Add: Share Forfeiture Account: ₹XX

When forfeited shares are later reissued at a discount, the discount is adjusted against the Share Forfeiture Account. Any balance remaining after reissue (profit on reissue) is transferred to Capital Reserve, which then appears under "Reserves and Surpluses". However, until reissue, it remains under Share Capital itself.

The correct option is Option 1: Share capital