Preheat oven: Preheat oven to 350°F (180°C). Grease two 9-inch round cake pans and line the bottoms with parchment paper.
Prepare the cake: In a medium bowl, whisk together flour, sugar, baking powder, and salt. In a large bowl, whisk together butter, milk, eggs, and vanilla extract. Add the dry ingredients to the wet ingredients and mix until just combined. Fold in the sliced strawberries.
Pour the batter: Divide the batter evenly between the prepared pans and smooth the tops.
Bake the cake: Bake for 30-35 minutes or until a toothpick inserted in the center comes out clean.
Make the strawberry sauce: In a small saucepan, combine the sliced strawberries, granulated sugar, and cornstarch. Cook over medium heat, stirring constantly, until the mixture thickens. Add the water and cook for an additional 2-3 minutes.
Assemble the cake: Place one of the cooled cakes on a serving plate. Drizzle the strawberry sauce over the top of the cake. Top with the second cake.
Top with whipped cream: In a medium bowl, whip the heavy cream until stiff peaks form. Add the granulated sugar and vanilla extract and mix until combined. Top the cake with the whipped cream.