Everyone in Wonderland is either sane or mad. A sane person believes a statement if and only if it is true, while a mad person believes a statement if and only if it is false.
The King of Hearts, Queen of Hearts, and Alice all know whether each of the three is sane or mad (although they might not believe it).
The King says, "I believe that Alice believes I'm sane."
Alice says, "I believe that the Queen believes the King is mad."
The Queen says, "I believe that Alice is mad!"
Each person told the truth. Which of the three are mad?
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By the 1st statement, which was made by the King, we can come to a conclusion that if King is mad then Alice is also a mad and vice versa.
REASON: Assume King to be a mad, then Alice believes a False statement, thereby making her a mad. Assume King to be sane, now Alice believes a True statement making her sane too.
Now in the 2nd statement assuming 'King is mad' as True, Alice becomes a sane but that is contradictory to our conclusion from 1st statement.
So considering 'King is mad' as False Queen becomes a mad (since she is mad she believes 'Alice is mad' which is a false) and Alice becomes sane and so does the King.
This is my own solution so I'm sorry if I'm wrong. Please bear with the bad English.