Confused regarding calorie targets and exercise :/

I'm 5'4 and weigh 140lbs and want to eventually get back to 112lbs, although at the moment my goal is 120lbs. 

Using the calculator it recommends that I eat 1200 calories however that would be quite a struggle for me, except on days where I'm just not hungry...which are about once a week.

So if I eat more than that but exercise, will I still see results?

For example, if I ate 1700 calories, exercised enough to burn 500 then would the overall be 1200? Or does that not work?

Because I think 1200 is unrealistic for me personally, I'm happy to eat around 1600 and exercise if that doesn't ruin my goal. 

But also, would the exercise push up my general activity level and change my calorie target? :/

I would much prefer to exercise more and eat more, but I want to be as accurate as possible with my calorie information otherwise there isn't much point in attempting to keep track of it all. 

Thanks for the help! :)

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