@s1b
"What is the proper method to bring this inventory in? Should I enter a Bill, Expense or Check? That could bring the inventory in - then how do I “pay” for it?"
You will create a $0 Bill/Expense/Check to "pay" for it. It really makes no difference if you use a Bill, Expense, or Check. Let's use a Bill as an example. On the Bill, under 'Item details', enter the items you want to put into inventory and the proper quantity and cost. Then, under 'Category details' enter the account you want to offset the inventory total and enter total as a negative amount so the bill is $0. The offsetting account can be Opening Balance Equity (OBE). However, you (or your CPA) are going to need to make adjustments because OBE is a temporary account and their is no single account that offsets inventory on your balance sheet. At least OBE will raise a flag that an adjustment needs to be made.
"We prefer to report to the IRS on Cash Basis, is there a work around?"
If you haven't discussed this with your CPA, I would suggest it. Cash basis accounting expenses inventory at the time of purchase, not the time of sale. It's not really your choice as to whether you use cash or accrual. If you carry inventory, the IRS generally requires that you be on accrual basis. There are some exceptions based on business size and whether you track inventory (you do) so, IMO, you should be on accrual basis. If your CPA gives you their blessing to be on cash basis, great. You/they will need to answer to the IRS in case of an audit.
