Arithmetic on signed 12-bit octal number stored in sign magnitude form
$100 011 110 101$ if is taken as SM in 12bit is $-245$ decimal and $011 100 001 010$  is $1802$ decimal, so we obtain $-245-1802=-2047$. $2047$ in binary is $11111111111$ with $11$ bits so for minus we add one more $1$ to left = $111111111111$. It is octal 7777.