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

Share Capital

The correct answer is option 2- Share Capital.

Balance of share forfeiture account is shown in the balance sheet under Share Capital.

The Share Forfeiture Account represents the amount received on forfeited shares (i.e., the part of share capital already paid by shareholders whose shares were forfeited). This amount is not refunded, and it stays with the company. In the Balance Sheet, it is shown under the head:"Share Capital" – as an addition to paid-up capital.