It's and a plural object

I'm confused as to how you can be teaching ESL and have doubts about this usage? It's is a contraction for "It Is".

It is a collective subject. It would be thought of as a singular.

How would it sound to you if it were spoken as: "It are an orange and an apple."?

Think of it as: "I found on the table an orange and an apple."
"Really?"
"Yes! It's (located) there".

This might help: http://english.stackexchange.com/questions/205580/can-it-be-used-with-plural-subject

I know it's is a contaction for it is, but I thought I would have to transform the sentence to " They are an apple and an orange" or "There is an apple and an orange" and I didn't want to do that(make too many changes)

See the above.

Yes, the apple and an orange can be regarded as a set.