Discount allowed on reissue of forfeited shares is debited to which account?

Share Forfeiture a/c

The correct answer is option 2- Share Forfeiture A/c.

When the shares forfeited are reissued at discount, Bank account is debited by the amount received and Share capital account is credited by the paid up amount. The amount of discount allowed is debited to Share Forfeited Account. The journal entry on reissue of shares at discount is as follows-
Bank A/c Dr.  (Received amount)                 
Share forfeiture A/c  Dr.  (Discount amount)
      To Share Capital A/c  (issue price)