The Gray-code sequence is:
000 → 001 → 011 → 010 → 110 → 111 → 101 → 100 → repeat.
We extract the present state $(Q_2, Q_1, Q_0)$ and the next value of $Q_1$ (which equals $D_1$):
\[
\begin{array}{c|c}
(Q_2 Q_1 Q_0)_{\text{present}} & Q_1^{+} = D_1
\hline
000 & 0
001 & 1
011 & 1
010 & 1
110 & 1
111 & 0
101 & 0
100 & 0
\end{array}
\]
Now write minterms where $D_1 = 1$:
States giving $D_1 = 1$ are: 001, 011, 010, 110.
Corresponding minterms:
001 → $\overline{Q_2}\,\overline{Q_1}\,Q_0$
011 → $\overline{Q_2}\,Q_1\,Q_0$
010 → $\overline{Q_2}\,Q_1\,\overline{Q_0}$
110 → $Q_2\,Q_1\,\overline{Q_0}$
Group and simplify using K-map:
Resulting simplified expression is:
\[
D_1 = \overline{Q_2}\,Q_0 \;+\; Q_1\,\overline{Q_0}.
\]
This matches option (C).
Final Answer: $\overline{Q_2} Q_0 + Q_1 \overline{Q_0}$