Use GROUP BY to combine the items in Table1, and then JOIN them to Table2.
The GROUP BY can use aggregate functions - including SUM - to get the quantity per item.
SELECT a.Item, a.QTY, b.QTY - a.QTY AS Balance
FROM (SELECT Item, SUM(QTY) AS QTY FROM Table1
GROUP BY Item) a
JOIN Table2 b ON a.Item = b.Item