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

Share capital

The correct answer is Option (3) → Share capital

The amount in the Share Forfeiture Account represents the money already received from shareholders on shares that were later forfeited. This amount is part of the capital money raised by the company and remains with the company until the forfeited shares are reissued.

It is specifically disclosed as "Add: Forfeited Shares" under the 'Subscribed but not fully paid-up' or 'Subscribed and fully paid-up' category, depending on the status of the shares before forfeiture.