Cream butter and gradually add the sugar. Beat until light and fluffy. Add egg yolks, 1 at a time, beating well after each addition. Stir in coconut extract.

Sift together the flour, baking powder, and salt. Add to the batter alternately with the milk, in three parts. Beat until well blended. Stir in 1 cup of the coconut (you should have approximately 3 cups) and the grated lemon peel.

Beat egg whites until stiff but not dry. Stir a few spoonfuls into the batter, then gently fold in the remainder. Spoon evenly into the prepared pans.

Bake in a preheated 350-degree oven for 25 minutes or until a toothpick inserted in the center comes out dry. Let cakes cool in the pans about 10 minutes, then turn out onto cake racks. Cool.

Frost with Seven Minute Frosting and sprinkle top and sides thickly with remaining coconut.

NOTE: If you don't have the time (or you're not in the mood) to do the fresh coconut thing, you can substitute 1 pound of frozen flaked coconut.