Beat butter at medium speed with an electric mixer until fluffy; gradually add sugar, beating well. Add egg yolks, 1 at a time, beating until blended after each addition.
Combine flour and baking powder; add to butter mixture alternately with milk, beginning and ending with flour mixture. Beat at low speed until blended after each addition. Stir in vanilla.
Beat egg whites at high speed with electric mixer until stiff peaks form; fold one-third of egg whites into batter. Gently fold in remaining beaten egg whites just until blended. Spoon batter into 3 greased and floured 9-inch round cake pans.
Bake at 350° for 18 to 20 minutes or until a wooden pick inserted in center comes out clean. Cool in pans on wire racks 10 minutes; remove from pans, and cool completely on wire racks.
Spread Lemon Filling between layers. Spread Cream Cheese Frosting on top and sides of cake. Sprinkle with toasted coconut and spread Lemon on top. Garnish, if desired.
Remove the zest of 3 lemons, being careful to avoid the white pith.
Put the zest in a food processor fitted with the steel blade. Add the sugar and pulse until the zest is very finely minced into the sugar. Cream the butter and beat in the sugar and lemon mixture. Add the eggs, 1 at a time, and then add the lemon juice, salt and cornstarch. Mix until combined. Pour the mixture into a 2 quart saucepan and cook over low heat until thickened (about 10 minutes), stirring constantly. The lemon curd will thicken at about 170 degrees F, or just below simmer. Remove from the heat and cool or refrigerate.
Cream Cheese Frosting
Beat butter and cream cheese at medium speed with an electric mixer until creamy.
Gradually add powdered sugar, beating at low speed until blended; stir in vanilla.
Preheat oven to 350°F.
Spread coconut in a single layer on a baking sheet. (cover with parchment paper)
Place coconut in oven. Check after about 2 minutes. Continue checking every minute until the coconut is the desired color. We like ours toasted on the edges, but still white in the middle.
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