Black bars appear in app when targeting iOS7.1 or 7.0 in Xcode6

Steps to reproduce:

1. Create a new project using Xcode6 (single view template, iPhone only, Objective-C)
2. Navigate to project settings and change the deployment target from 8.0 to 7.1
3. Run the application on a iPhone5/S with 7.1 installed or in the iPhone5/s 7.1 simulator (You may have to download the iOS7.1 simulators)
4. The app appears with black bars on the top and the bottom.

If you run the application on the iPhone5/S 8.0 simulator, the screen will appear as expected, all white.

Why is this happening? Is there a fix or workaround?

I was able to resolve the issue manually, seems like it is a bug with Xcode for now and I will file a radar report.

To resolve the issue, follow the below steps:

1. Navigate to project settings
2. Under "App Icons and Launch Images" click on "Use Asset Catalog"
3. Select "Migrate" on the popup that appears.

This should fix the issue.

I encountered the same problem some days ago and I founded out that the problem in my case was the missing LaunchScreen.xib in General setting under App icons and launch images: