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

Share Forfeiture Account represents the amount received from shareholders on forfeited shares. When shares are forfeited due to non-payment of allotment money or call money, the amount already paid by the defaulting shareholder is credited to this account.

The balance in Share Forfeiture Account is shown in the Balance Sheet as an addition to Share Capital under the Shareholders' Funds section.

Presentation in Balance Sheet:

Shareholders' Funds:
Share Capital                           xxx
Add: Forfeited Shares Account          xxx

This treatment is logical because the forfeited amount is essentially part of the company's capital that has been received from shareholders, even though those shareholders are no longer members of the company. The amount remains with the company and strengthens its capital base.

When forfeited shares are reissued, any profit on reissue remains in the Share Forfeiture Account (as capital reserve), while any discount given on reissue is debited to this account. The remaining balance, if any, continues to be shown as an addition to Share Capital.

A common confusion is whether this should be shown under "Reserve and Surplus" since it represents a gain. However, as per prescribed accounting treatment, Share Forfeiture Account balance must specifically be added to Share Capital, not classified separately as a reserve.