• You have been provided with an extract of the financial statements of IT Mania Ltd for the June 2023 year-end. IT Mania Ltd Statement of financial position as at 30 June 2023 Assets Rand Non-current assets 990 000 Cash and cash equivalents 1 650 000 2 640 000 Equity and liabilities Share capital (2 300 000 Class A shares) 1 475 000 Retained earnings 625 000 Liabilities (non-current liabilities plus current liabilities) 540 000 2 640 000 The directors of IT Mania Ltd passed a resolution on the 1st of May 2023 to repurchase 180 000 Class A shares at a maximum price of R4,55 per share. IT Mania Ltd placed an order in the market and was able to buy back 150 000 Class A shares on the 1st of June 2023 at an open market price of R4,20 per share. ANNEXURE I: FORMATIVE ASSESSMENT 2 97 HFAC231-1-Jan-June2023-FA2-TD-V2-15122022 REQUIRED: 3.1) Prepare the relevant journal entries to account for the share buyback on 1 June 2023 in the records of IT Mania Ltd. Dates and narrations are not required for the journal entries. (8 marks) 3.2) Prepare the Extract of the Statement of Financial Position for IT Mania Ltd as at 30 June 2023 after the share buyback. (5 marks) 3.3) According to Section 48 of the Companies Act, No.71 of 2008, a company may repurchase its own shares. After the repurchase, the company must meet the solvency and liquidity requirements as set out in the Companies Act, No.71 of 2008. Discuss whether IT Mania Ltd meets the solvency and liquidity requirements after the share buyback. Provide supporting reasons / amounts for your answer. (4 marks) Note: • All amounts should be rounded to the nearest Rand. Show all calculations clearly. • Your answer must comply with International Financial Reporting Standards (IFRS). Competency Framework Reference: D1.1 Financial reporting: in accordance with International Financial Reporting Standards (IFRS) a) Prepare, analyze and evaluate general purpose financial statements in accordance with IFRS for an entity, which could be a for-profit entity, an SME, a public sector entity or a not-for-profit entity.