The hypothetical scanning (HS) method provides the absolute entropy and free energy from a Boltzmann sample generated by Monte Carlo, molecular dynamics or any other exact simulation procedure. Thus far HS has been applied successfully to magnetic and polymer chain models; in this paper and the following one it is extended to fluid systems by treating a Lennard-Jones model of argon. With HS a probability P-i approximating the Boltzmann probability of system configuration i is calculated with a stepwise reconstruction procedure, based on adding atoms gradually layer-by-layer to an initially empty volume, where they are replaced in their positions at i. At each step a transition probability (TP) is obtained from local grand canonical partition functions calculated over a limited space of the still unvisited (future) volume, the larger this space the better the approximation. P-i is the product of the step TPs, where ln P-i is an upper bound of the absolute entropy, which leads to upper and lower bounds for the free energy. We demonstrate that very good results for the entropy and the free energy can be obtained for a wide range of densities of the argon system by calculating TPs that are based on only a very limited future volume. (C) 2003 American Institute of Physics.