C.
Given the $(Q_2, Q_1, Q_0)$ state assignments of A1 = (0,0,0), B1 = (0,0,1), C1 = (0,1,0), D1 = (0,1,1),
E1 = (1,0,0), F1 = (1,0,1), G1 = (1,1,0), A2 = (1,1,1), develop the transition table as shown below.
\begin{tabular}{|c|c|c|c|c|c|c|}
\hline
$Q_2$ & $Q_1$ & $Q_0$ & C & $Q_2^*$ & $Q_1^*$ & $Q_0^*$ \\
\hline
0 & 0 & 0 & 0 & & & \\
\hline
0 & 0 & 1 & 0 & & & \\
\hline
0 & 0 & 1 & 1 & & & \\
\hline
0 & 1 & 0 & 0 & & & \\
\hline
0 & 1 & 1 & 1 & & & \\
\hline
0 & 1 & 1 & 1 & & & \\
\hline
1 & 0 & 0 & 0 & & & \\
\hline
1 & 0 & 1 & 0 & & & \\
\hline
1 & 0 & 1 & 1 & & & \\
\hline
1 & 1 & 0 & 0 & & & \\
\hline
1 & 1 & 1 & 0 & & & \\
\hline
1 & 1 & 1 & 1 & & & \\
\hline
\end{tabular}