iPad sidecar not working

Hello, I've got a problem with my iPad sidecar. It was mentioned in different discussion here before but it is a long time now and it did not resolve my problem.

It happened long time ago but I am not able to find solution till now. Once I switched my sidecar to mirror the Mac display. When I switched back black bars on the top and the bottom of iPad display appeared and they are still present. Those black bars are I would say changing the resolution some way and causing apple pencil not to be aligned with a Mac cursor. When I put my apple pencil on the centre of iPad display the cursor matches but when I put it on the top the cursor is below the pencil top and similarly when i put it on the bottom, the cursor is above pencil top. It seems like those black bars are "squeezing" the display from the top to the bottom of the iPad (sorry I am not able to explain it better) and this way making pencil to be not aligned. Before this problem, iPad display was showing content on fullscreen and I am not able to force it to do it again.

I have tried a lot of things I found, like turning the touchBar or SiteBar on ad off but these didn't help at all. I have also tried to switch Mac to SafeMode and also tried to create new user with all settings set to default but in both cases the problem with sidecar remained so I am assuming that it is not a problem with my settings but some internal problem of the devices.

I am using the latest release of IOS on all of my devices, they are using the same apple ID and are connected via same wi-fi connection.

Thank you for reading my problem and for your suggestions.

Lexi