In a large bowl, cream butter and sugar until light and fluffy. Beat in the chocolate, eggs and vanilla. Combine flour and salt; gradually add to creamed mixture and mix well.
On a lightly floured surface, roll out dough to 1/4-in. thickness. Cut with a floured 3-in. scalloped cookie cutter. Place 1 in. apart on ungreased baking sheets; cut out centers using a floured 1-in. scalloped cookie cutter.
Bake at 350° for 10-14 minutes. Remove to wire racks to cool completely.
For glaze, in a small bowl, combine confectioners' sugar and 1/4 cup water. Place coconut in a resealable plastic bag; add food coloring and remaining water. Seal bag and toss until coconut is tinted.
Spread cookies with glaze; sprinkle with coconut. Decorate with red-hots. Yield- 4 dozen.
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