Beat butter and sugar in large bowl with electric mixer until creamy. Beat in egg unti light and fluffy. Mix in flour, lemon juice and peel, baking powder and salt. Cover refrigerate about 2 hours or until firm.
Preheat oven to 350 degrees F (175 degrees C).
Roll out dough, a small amount at a time, to 1/4-inch thickness on well-floured surface with floured rolling pin. (Keep remaining dough in refrigerator.) Cut with 3-inch round cookie cutter. Transfer to ungreased cookie sheets. Sprinkle with sugar.
Bake 8 to 10 minutes until lightly browned on edges. Cool 1 minute on cookie sheets. Remove to wire racks; cool completely. Store in airtight container.