The balance of the 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 on those shares is transferred to Share Forfeiture Account. This account has a credit balance and represents the amount forfeited from shareholders.

The Share Forfeiture Account is shown in the Balance Sheet as an addition to Share Capital (specifically added to the Subscribed and Paid-up Capital).

Balance Sheet Presentation:

Share Capital:

• Authorised Capital: ₹xxx
• Issued Capital: ₹xxx
• Subscribed and Called-up Capital: ₹xxx
• Add: Share Forfeiture Account: ₹xxx

Reason for this treatment:

Share Forfeiture Account represents capital in nature. The forfeited amount originally came from share capital transactions and will either be:

• Used to write off discount when forfeited shares are reissued, or
• Transferred to Capital Reserve (which is also part of shareholders' funds)

Since it relates to share capital transactions and forms part of shareholders' equity, it is shown under the Share Capital head rather than as a separate reserve or liability.

Correct Option: 3 (Share Capital)