When the shares are forfeited by the company, the share capital account is debited with:

Amount called up on the shares forfeited till the date of forfeiture

The correct answer is option 2- Amount called up on the shares forfeited till the date of forfeiture.

Accordingly, share capital account is debited with the amount called-up in respect of shares are forfeited and crediting the respective unpaid calls account’s or calls in arrears account with the amount already received.

Journal entry on forfeiture of shares-

Share Capital A/c Dr. (Called up amount)
    To Share forfeiture A/c  (Received amount)
    To Share Allotment/Call A/c ( Not received amount)