Pauline Davis's charge account statement shows an unpaid balance of $225. The monthly finance is 1.25% of an unpaid balance. What is the new balance account?

The new account balance would the the unpaid balance (225) plus the interest (unpaid balance multiplied by the interest rate) or (225 X 1.25%).

So the answer would be 225 + (225 X. 0125) = new balance

You always pay the interest rate on whatever balance you have remaining on your credit card statement each month.