Preheat your oven to 350°F (175°C) and prepare your cake pans. You'll need two round cake pans, one that is 8 inches in diameter and one that is 6 inches in diameter. Grease the pans with butter and lightly dust with flour.
In a large mixing bowl, cream the butter and sugar until light and fluffy.
Add the eggs, one at a time, mixing well after each addition.
In a separate bowl, whisk together the flour and baking powder.
Add the dry ingredients to the wet ingredients, alternating with the milk, and mix until well combined.
Add the vanilla extract and mix well.
Divide the batter between the two cake pans. The larger cake pan should be filled about 2/3 of the way full, while the smaller one should be filled about 1/3 of the way full.
Bake the cakes in the preheated oven for 25-30 minutes, or until a toothpick inserted into the center comes out clean.
Allow the cakes to cool completely before removing them from the pans.
Once the cakes have cooled, it's time to decorate! First, place the larger cake on a cake stand or plate. Cover it with a generous layer of white frosting.
Add a few drops of red food coloring to the remaining frosting and mix well until you achieve the desired shade of red.
Use a knife or spatula to frost the smaller cake with the red frosting.
Place the smaller cake on top of the larger cake to create the toadstool shape.
Use chocolate chips to create the spots on the toadstool cap. Simply press the chocolate chips into the red frosting, arranging them in a circular pattern.