Arguing over the forfeited chips

Hi.

Please can you answer the following question for me? There are 8 players at the table and blinds are 500/1000. Player A posts the 500 Small Blind. Player B posts the 1000 Big Blind. Players C to G all fold without calling, leaving only Player H to call. Player H only has 400 chips and goes All In, so we now have Player H with a 400 bet, Player A with Small Blind of 500 and Player B with Big Blind of 1000.

Player A (the Small Blind) chooses to fold and forfeit their Small Blind of 500 chips, leaving only Player B with 1000 blind and Player H with 400 All In.

When the hands are declared, they both have exactly the same hole cards, so it's a split pot. However, who should win the folded Small Blind (500)? Does it get split between both players, or does Player A (Big Blind) take it all, as Player H couldn't even meet the Small Blind?

This actually happened in a game tonight and caused a huge argument! Half said Player H wasn't entitled to the 500 Small Blind, as she'd only bet 400 in the first place and the other half said it should be split equally!

What SHOULD have happened, please?

With sincere thanks

Fiona