Plaintiff-appellant Michael Batían (“trustee”) appeals the district court’s judgment affirming the decision of the bankruptcy court. Batían filed an action to recover payments made by a chapter 11 debtor to defendant-appellee Transamerica Commercial Finance Corporation (“TCFC”). The bankruptcy court found that the payments were not avoidable transfers under 11 U.S.C. § 547(b). We agree with the bankruptcy court and the district court that the trustee did not satisfy his burden of showing that TCFC received a greater amount by virtue of the payments than it would have received in a hypothetical chapter 7 liquidation.
FACTUAL AND PROCEDURAL BACKGROUND
Smith’s Home Furnishings, Inc. (“Smith’s”), sold furniture, electronic goods, and appliances at 19 stores in Oregon, Washington, and Idaho. TCFC was one of Smith’s primary lenders for almost a decade. TCFC financed Smith’s purchase of some merchandise (the “prime inventory”), consisting mainly of electronic goods and appliances. TCFC’s loans were secured by a first-priority floating lien on the prime inventory and the proceeds from it.1 Thus, the prime inventory served as collateral for TCFC’s loans to Smith’s.
Under the loan agreements, TCFC extended credit to Smith’s by granting approval to various manufacturers. After receiving approval, the manufacturers shipped merchandise to Smith’s. When Smith’s sold a product financed by TCFC, it paid TCFC the wholesale price of that product.
Smith’s did not segregate its sales receipts. Instead, Smith’s deposited all its sales proceeds into commingled bank accounts at the end of each day. First Interstate Bank (“the Bank”), Smith’s revolving-line-of-credit financier, swept the accounts daily, leaving the accounts with overnight balances of zero. The next day, the Bank advanced new funds to Smith’s if sufficient collateral was available. Smith’s then paid its operating expenses and creditors, including TCFC.2
During 1994, Smith’s suffered substantial losses. Consequently, in March 1995 TCFC reduced Smith’s line of credit from $25 million to $20 million. Over the next few months, TCFC reduced Smith’s line of credit twice more, down to $13 million by *962August. During the same period, TCFC required substantial paydowns of Smith’s debt; Smith’s paid TCFC most of its available cash in a series of 36 payments, totaling more than $12 million, between May 24,1995, and August 22,1995.
On August 18, 1995, TCFC declared a final default, accelerated the entire debt due from Smith’s, and sought a receiver for the company. For the first time, TCFC also sought to require Smith’s to segregate the proceeds from its collateral.
Smith’s voluntarily initiated bankruptcy proceedings under chapter 11 of the Bankruptcy Code on August 22, 1995 (the “petition date”). As of that date, Smith’s owed $10,728,809.96 to TCFC. TCFC took possession of its collateral and liquidated it, receiving $10,823,010.58.
On October 11, 1995, the case was converted to a chapter 7 liquidation and Bat-ían was appointed as trustee. The trustee discovered the $12,842,438.96 in payments that Smith’s had made to TCFC during the 90 days before the petition date (the “preference period”). Believing that the payments were preferential, he asked TCFC to return the money to the bankruptcy estate. When TCFC refused, the trustee initiated this adversary proceeding, seeking to avoid the payments as preferential transfers, under 11 U.S.C. § 547(b), and to recover the money for the benefit of other creditors of Smith’s, under 11 U.S.C. § 550(a).
The parties stipulated that the payments met the first four elements of a preferential transfer under 11 U.S.C. § 547(b)(1)-(4). Additionally, TCFC agreed not to pursue affirmative defenses under 11 U.S.C. § 547(c)(l)-(2). The parties proceeded to trial to determine whether the payments met the fifth element of the preferential transfer statute, 11 U.S.C. § 547(b)(5), and whether TCFC could establish an affirmative defense under 11 U.S.C. § 547(c)(5).
On September 10, 1998, the bankruptcy court ruled, in a letter opinion, that the trustee had failed to meet his burden of proof in showing that the payments were preferential transfers. The court reasoned that, because the value of the collateral on the petition date ($10,823,010.58) exceeded the amount of TCFC’s claim on the petition date ($10,728,809.96), TCFC was oversecured by $94,200.62. As a result, the court concluded that, because TCFC was a floating-lien creditor, the trustee was required to prove that TCFC was undersecured at some time during the preference period in order to avoid the transfers. The court also ruled that TCFC’s collateral should be valued at liquidation value ($10,823,010.58) and that liquidation costs should be deducted from the liquidation value in computing the value of the collateral, but that the trustee had failed to present credible evidence of TCFC’s liquidation costs. Because the bankruptcy court concluded that the trustee had'not proved that the transfers were preferential, the court did not address TCFC’s ’ affirmative defense under § 547(c)(5).
The trustee filed a motion for reconsideration. In response, the bankruptcy court amended its opinion to correct typographical and computational errors, but otherwise confirmed its judgment. The trustee timely filed an appeal to the district court, raising the same issues that it raises in this appeal. In a published opinion, Batlan v. Transamerica Commercial Finance Corp., 237 B.R. 765, 776 (D.Or. 1999), the district court affirmed the bankruptcy court’s decision “in all respects.” This timely appeal followed.
STANDARDS OF REVIEW
We review de novo the district court’s decision on appeal from a bank*963ruptcy court. That is, “ ‘[w]e independently review the bankruptcy court’s decision and do not give deference to the district court’s determinations.’ ” Preblich v. Battley, 181 F.3d 1048, 1051 (9th Cir.1999) (quoting Robertson v. Peters (In re Weisman), 5 F.3d 417, 419 (9th Cir.1993)). We review the bankruptcy court’s findings of fact for clear error and its conclusions of law de novo. Id. Finally, we review the bankruptcy court’s evidentiary rulings for abuse of discretion. See Ardmor Vending Co. v. Kim (In re Kim), 130 F.3d 863, 865 (9th Cir.1997).
DISCUSSION
I. “Greater Amount” Test
This case requires us to interpret two sections of the Bankruptcy Code, 11 U.S.C. §§ 547(b)(5) and 547(g). 11 U.S.C. § 547(b) permits a trustee to “avoid any transfer of an interest of the debtor in property” when certain conditions are met. One of the conditions is that the transfer enable the creditor to receive more than such creditor would receive if:
(A) the case were a case under chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by the provisions of this title.
11 U.S.C. § 547(b)(5). TCFC and the trustee dispute whether the 36 payments made during the preference period enabled TCFC, as a result of the 36 payments, to receive more than if the payments had not been made and TCFC had received payments only pursuant to a Chapter 7 liquidation. Section 547(g) places the burden of proof on the trustee to show all of the conditions of § 547(b). Thus, the trustee must show that the creditor received a greater amount than it would have if the transfer had not been made and there had been a hypothetical chapter 7 liquidation as of the petition date. If the trustee shows that TCFC received a greater amount by virtue of the 36 payments, then the payments are avoidable as preferential transfers. See In re Lewis W. Shurtleff, Inc., 778 F.2d 1416, 1421 (9th Cir.1985). The trustee contends that he satisfied his burden because: 1) the 36 payments plus the amount that TCFC received from the post-petition sale of its collateral is greater than the amount received from the post-petition sale of the collateral standing alone; and 2) TCFC has not traced the source of the allegedly preferential payments to sales of its collateral. We disagree with both of the trustee’s arguments.
A. The add-back method does not satisfy the trustee’s burden when the payments come from collateral secured by a floating lien
The trustee tried to satisfy his burden under § 547(b)(5) by adding the amount of the 36 payments to the amount TCFC received as a result of the post-petition sale of its remaining collateral. The trustee then compared this amount to the obviously smaller amount of the post-petition sale by itself and concluded that TCFC must have received a greater amount because of the payments. Some bankruptcy courts have used the same “add-back” method employed by the trustee to determine the status of a creditor on the petition date. See In re Al-Ben, Inc., 156 B.R. 72, 75 (Bankr.N.D.Ala.1991) (adding alleged preferences to the amount of unpaid balance at the petition date to find the creditor’s secured status); In re Estate of Ascot Mortgage, Inc., 153 B.R. 1002, 1018 (Bankr.N.D.Ga.1993) (adding pre-petition amounts received to what would have been received under a chapter 7 liquidation).
*964We agree with the bankruptcy-court and the district court, however, and conclude that the “add-back” calculation does hot satisfy the trustee’s burden in this case. Pre-petition transfers to a creditor that is fully secured on the petition date are generally not preferential because the secured creditor is entitled to 100 percent of its claims. See In re LCO Enterprises, 12 F.3d 938, 941 (9th Cir.1993). This is not a hard and fast rule. As the bankruptcy court in this case noted, payments that change the status of a creditor from partially unsecured to fully secured at the time of petition may be preferential. See Porter v. Yukon Nat’l Bank, 866 F.2d 355, 359 (10th Cir.1989). Moreover, a transfer may be avoided when the creditor is fully secured at the time of payment, but is undersecured on the petition date. See In re Estate of Sufolla, Inc., 2 F.3d 977, 985-86 (9th Cir.1993). The trustee failed to show, however, that TCFC was undersecured at any time during the preference period. Instead, the evidence submitted showed that as of the petition date, the value of the collateral held by Smith’s exceeded its indebtedness to TCFC.3 If TCFC was never undercollateralized, then TCFC could not have received more by virtue of the 36 payments than it would have received in a hypothetical liquidation without the payments.
It is important to understand that TCFC did not loan one fixed amount to the debtor; instead, TCFC held a “floating lien.” A floating lien is a financing device where the creditor claims an interest in property acquired after the original extension of the loan and extends its security interest to cover further advances. The floating lien is a lien against a constantly changing mass of collateral for a loan value that will change as payments are received and further advances are made. See 3 Norton Bankr.L. & Prac.2d § 57.23. The cases the trustee cites applying the “add-back” method do not deal with floating liens. It is not correct to assume that the 36 payments gave TCFC more than it would have received if the payments had not been made. Instead, under a floating lien arrangement, those payments are used to liquidate part of the debtor’s debt. Then, new credit under the floating lien is extended and is secured by new collateral. It is not enough for the trustee to show that the 36 payments plus the amount received upon dissolution exceeded the amount of TCFC’s secured claim as of the petition date. Since collateral and indebtedness changed throughout the preference period, these values do not prove that TCFC received more by virtue of the payments than it would have received without them. Under § 547(b)(5), the trustee must show that the amount of indebtedness under the floating lien was greater than the amount of collateral at some point during the 90-day period. See In re Schwinn Bicycle Co., 200 B.R. 980, 992-93 (Bankr.N.D.Ill.1996) (“At no point in time did the collateral value fall below the outstanding debt, and therefore TIFCO was not preferenced in having received payments on its secured debt.”).
The trustee contends that the existence of the floating lien means that the burden is shifted to TCFC under § 547(c)(5). Section 547(c)(5) provides an affirmative defense for creditors when the trustee has *965successfully demonstrated that the creditor received more from the payments than under a hypothetical liquidation. Section 547(c)(5) insulates the transfer of a security interest in'after-acquired property, i.e., a floating lien, provided that the creditor does not improve its position during the preference period. In effect, the trustee contends that the existence of a floating lien means that he does not have to prove that the creditor was undersecured at some point during the 90-day period and therefore received more by virtue of the payments than the creditor would have if the creditor had waited for a chapter 7 liquidation.
We reject the trustee’s argument.4 A floating lien does not shift the burden of showing avoidability to the creditor. The trustee still has to satisfy his burden under § 547(b)(5). The Tenth Circuit has addressed the question of what needs to be shown by a trustee to avoid a transfer financed by the sale of inventory subject to a floating lien. See In re Castletons, 990 F.2d 551 (10th Cir.1993). In Castletons, the creditor held a floating lien on the debtor’s inventory, accounts receivable, and proceeds. The trustee sought to avoid the payments given by the debtor to the creditor during the preference period. The Tenth Circuit affirmed the district court’s holding that the trustee failed to show that the creditor received more from the challenged payments than it would have received in a chapter 7 liquidation. It explained:
[A]ll payments to [the creditor] came from assets already subject to its security interest. It is further uncontested that the nature of [the creditor’s] security interest in debtor’s assets was never altered during the preference period.
Under these circumstances, it cannot be said, as § 547(b)(5) requires, the transfers enabled [the creditor] to receive more on its debt than would be available to it in a Chapter 7 distribution.
Id. at 555. Essential to the court’s holding was its recognition that the creditor held a floating lien: “While the identity of individual items of collateral changed because of sales and subsequent acquisitions of new collateral, the overall nature of [the creditor’s] security interest remained the same.” Id. at 556.
It is true that other courts have evaluated floating lien cases by proceeding directly to the § 547(c)(5) affirmative defense without a discussion of the requirements of § 547(b)(5). See In re Wesley Indus., 30 F.3d 1438, 1443 (11th Cir.1994); In re Lackow Bros., Inc., 752 F.2d 1529, 1530-31 (11th Cir.1985). But in those cases, the parties had stipulated or the bankruptcy court had found that the creditor was un-dersecured as of the petition date. In *966other words, the § 547(b)(5) burden had already been satisfied so it did not need to be discussed. The trustee in this case never showed that TCFC was underse-cured at any point during the 90-day period and the bankruptcy court determined that TCFC was fully secured as of the petition date. The trustee did not satisfy his burden. See Richard F. Duncan, Preferential Transfers, the Floating Lien, and Section 517(c)(5) of the Bankruptcy Reform Act of 1978, 36 Ark. L.Rev. 1, 20 (1987) (“[I]t is not necessary to reach the question of application of section 547(c)(5) until after the trustee has met his burden of proving all of the necessary elements of a preference under section 547(b).”); James J. White & Daniel Israel, Preference Conundrums, 98 Com. L.J. 1, 4 (1993) (“It is important to remember, however, that 547(c)(5). applies only to a creditor who is undersecured ninety days before bankruptcy. The creditor who is fully secured cannot be attacked under 547(b). There is no initial deficiency and later transactions cannot improve the creditor’s position.”).
B. The burden of tracing the funds used to make the preferential payments is on the trustee
The trustee contends that its use of the “add-back” method is correct because TCFC has not shown that the source of the allegedly preferential payments was sales of TCFC’s collateral. In Castletons, it was undisputed that all of the preference period payments came from sales of assets subject to the creditor’s floating lien. See In re Castletons, 990 F.2d at 555. In this case, however, the payments came from a commingled account that contained monies from the sales of other goods not subject to TCFC’s lien. When Smith’s made a sale, the proceeds were deposited into commingled bank accounts. Smith’s bank swept the accounts daily, leaving them with zero balances overnight. Thus, the challenged payments were not made directly from the proceeds of the sales of TCFC’s collateral. On the other hand, there is no evidence indicating that Smith’s did not sell off enough of TCFC’s collateral to account for all of the challenged payments.
There is some authority for requiring a creditor to establish that funds in a commingled account are traceable to the proceeds of its collateral. See Stoumbos v. Kilimnik, 988 F.2d 949, 957 (9th Cir.1993) (“This court has held that the creditor bears the burden of establishing that a deposit account contains proceeds of collateral covered by a security interest.”); In re Gibson Products, 543 F.2d 652, 657 (9th Cir.1976) (“We think that it is fair to place the burden on the creditor to identify his own proceeds and thus to defeat, in whole or in part, the trustee’s claim of preference.”). But Stoumbos and Gibson Products are not persuasive because they dealt with the intersection of the Bankruptcy Code and section 9-306(4) of the UCC. The UCC provision at issue in those cases allows a creditor to claim all funds in a deposit account where the funds are proceeds from collateral covered by the creditor’s security interest. See Stoumbos, 988 F.2d at 957. In this situation, there is a presumption against the creditor and in favor of the trustee. Id. at 957-58. This is the opposite of a § 547(b) analysis where the burden of proof is on the trustee and the presumption is in favor of the creditor. See In re Lease-A-Fleet, Inc., 151 B.R. 341, 347-49 (Bankr.E.D.Pa.1993) (acknowledging that under a Code section other than § 547, a secured creditor may be obliged to prove the validity of its alleged security interests, but explaining that “ § 547 is a self-contained Code section which provides its own specific desig*967nations of the burdens of proof of the respective parties”).
Instead, we believe that it is part of the trustee’s § 547(b)(5) burden to trace the funds used to make the payments to sales of merchandise not subject to TCFC’s liens. See In re Robinson Bros. Drilling, Inc., 6 F.3d 701, 703 (10th Cir.1993) (“Under 11 U.S.C. § 547(g), a trustee seeking to avoid an allegedly preferential transfer under § 547(b) ‘has the burden of proving by a preponderance of the evidence every essential, controverted element resulting in the preference.’ ”) (quoting 4 Collier on Bankruptcy ¶547.21[5] at 547-93 (15th ed.1993)); cf. In re Prescott, 805 F.2d 719, 726-27 (7th Cir.1986) (placing burden on trustee to establish value of collateral and to show that value of collateral was less than the amount of indebtedness at time of transfer). One might argue that the creditor will be in a better position than the trustee to prove whether or not the alleged preferential payments came from the proceeds of the sale of its own collateral. On the other hand, in bankruptcy, it is the trustee who accedes to the debtor’s books and records and has easier access and a better ability to divine the financial activities of the debtor in its last months of operation. Regardless of which side is better equipped to decipher the debtor’s final financial actions, we hold that the language of the statute places the burden of demonstrating the source of such preferential payments squarely on the trustee.5 See In re Lease-A-Fleet, 151 B.R. at 348 (“It is therefore an unfortunate fact of life that a preference plaintiff must effectively prove a negative (that the defendant is not a totally secured creditor), even though the secured creditor is the party with most access to proof of the validity of its own security interests.”).
Commingled funds or not, § 547(b)(5) places the burden on the trustee to show that the payments at issue came from a source other than sales of TCFC’s collateral. Here there is no suggestion that any sales of products funded by TCFC were not subject to TCFC’s priority lien. Instead, both parties stipulated that TCFC held a valid security interest in Smith’s property. It is true that the route the payment took to TCFC was indirect, but we are not prepared to release the trustee from his burden under § 547(b)(5) simply because the payments did not, demonstrably, come directly from sale of TCFC’s collateral. See In re Compton Corp., 831 F.2d 586, 591 (5th Cir.1987) (“The federal courts have long recognized that ‘[t]o constitute a preference, it is not necessary that the transfer be made directly to the creditor.’ ”) (quoting National Bank of Newport v. National Herkimer County Bank, 225 U.S. 178, 184, 32 S.Ct. 633, 56 L.Ed. 1042 (1912)). It is up to the trustee to show that the payments did not come from TCFC’s collateral before he can use *968the add-back method to satisfy his § 547(b)(5) burden.
II. Liquidation Costs
The trustee also argues that the bankruptcy court erred when it concluded that the trustee failed to prove liquidation costs. In the alternative, the trustee contends that the court was required to estimate liquidation costs. We disagree with both contentions.
As evidence of liquidation costs, the trustee presented deposition testimony by TCFC’s manager of Portfolio Administration during the liquidation. The manager testified that TCFC had incurred costs in liquidating the collateral, but that he did not know the amount of the costs. He also testified that he had prepared an analysis of projected costs two months before the bankruptcy, but admitted that the numbers involved were “real rough number[s] out of the ah'.” The bankruptcy court gave no weight to this testimony, observing that the witness admitted that he did not know the actual costs and that his estimates were plucked “out of the ah'.”
The trustee also presented expert testimony as evidence of liquidation costs. The expert testified generally about the types of costs that arise in a liquidation. The court gave this testimony no weight because it was not probative of the actual costs of liquidation incurred by TCFC.
The trustee additionally presented testimony from TCFC’s senior counsel that TCFC did incur some liquidation costs, and from a TCFC portfolio manager that TCFC had employed people to oversee the liquidation. The bankruptcy court did not err when it concluded that the evidence was not sufficient to prove liquidation costs. Even though the evidence demonstrates that some costs were incurred, that is not sufficient to establish the amount of those costs.
Neither was the court required to estimate the costs simply because the evidence established that TCFC had incurred some. Although bankruptcy courts have estimated liquidation costs, see, e.g., In re Martindale, 125 B.R. 32, 35-36 (Bankr.D.Idaho 1991), as the district court noted in this case: “The evidence presented to the bankruptcy court in this case fell far short of the ‘precise projections’ proffered in Martindale .... No one, much less the trustee, offered the court evidence from which a reasoned estimate could be made.” Batlan, 237 B.R. at 776. Consequently, the bankruptcy court did not err when it declined to estimate liquidation costs on this record.
Finally, the court did not abuse its discretion when it refused to admit into evidence the trustee’s proposed exhibit 54, a chart entitled “Smith’s” that appears to show expenses for Smith’s in Oregon, Washington,, and Idaho during the period from August 1995 through April 1996. The trustee provided no testimony as to what the document illustrates. It is unclear whether it represents estimates of costs or actual costs. Consequently, it is not probative of the actual amount of liquidation costs incurred by TCFC.
CONCLUSION
We affirm the decision of the bankruptcy court in all respects.
. TCFC also held a blanket lien on Smith's other assets; that lien was junior to the prime collateral liens of Smith's other secured creditors.
. Because of these procedures, the allegedly preferential payments, which we will describe below, were not made directly from the proceeds of the sales of TCFC’s collateral.
. See Batlan at 237 B.R. at 772-73 ($10,828,-004.36 in collateral versus $10,738,810 in debt). The trustee contends that the bankruptcy court’s determination of the value of TCFC’s collateral as of the petition date was in error because it did not deduct for liquidation costs. As discussed below, we agree with the district court that the bankruptcy court did not err in refusing to deduct any amount for liquidation costs on the ground that the trustee did not submit sufficient evidence of the amount of those costs.
. We also reject the dissent’s contention that the "contemporaneous exchange” exception, § 547(c)(1), places the burden on the creditor of showing that it was fully secured throughout the preference period. Section 547(c)(1) was designed to prevent trustees from avoiding payments that were clearly intended to support a new transaction, instead of an antecedent debt, even though the actual payment was not recorded until after the transaction. The classic example is when parties intended a cash sale, one party accepted a check instead of cash, and the party recorded the check several days after the sale. See In re Vance, 721 F.2d 259, 261 (9th Cir. 1983) ("There is no indication in the legislative history that Congress intended section 547(c)(1) to be a general exception covering a variety of transactions.”). While we do not need to set precise limits on the use of the § 547(c)(1) defense for our purposes in this case, we do hold that the defense does not absolve the trustee of his burden under § 547(b)(5). Cf. In re Bullion Reserve of North America, 836 F.2d 1214, 1217, 1219 (9lh Cir.1988) (applying the contemporaneous exchange exception only after concluding that the trustee had satisfied § 547(b)(5)).
. Our decision furthers the paramount policy behind § 547: equality of distribution among creditors of the debtor. See In re Schwinn Bicycle Co., 200 B.R. 980, 993 (Bankr.N.D.Ill. 1996). If a floating lien creditor genuinely did not profit from a preference period transfer, then the creditor should not be forced to disgorge those payments. We agree with the dissent that § 547 also tries to dissuade creditors from rushing to extract payments from the debtor shortly before bankruptcy. We do not think that our decision controverts this policy or that this is a case involving a race to the debtor's assets. The trustee offered no evidence that TCFC was less than 100 percent secured at the time of any of the 36 payments. For the payments it made to TCFC, the debtor received additional financing to keep its business afloat. Rather than encouraging a race to dismember the debtor, our decision to place the burden on the trustee to show that TCFC did not receive more by virtue of the payments than it would under a hypothetical liquidation encourages TCFC and other creditors to continue extending credit under floating liens.