Osman Keysaney, another resident, said the six civilians whose bodies were found in the Black Sea district had gunshot wounds to the head.
Fierce fighting
"They shot any moving creature around the neighbourhood," Hassan Sugule, another elder, said.
"They also killed children."
Heavy fighting between Ethiopian forces and armed men erupted on Thursday, resulting in the death of several people, including Ethiopian soldiers.
The body of an Ethiopian soldier was dragged on the streets by civilians on Thursday. This sparked reprisal attacks the following day.
On Friday, Ethiopian forces shelled suspected hideouts of armed groups in Mogadishu's southern districts.
The Ethiopian troops fought alongside the embatteled Somali government last year to drive out the Islamic Courts Union (ICU) fighters who briefly controlled large parts of the country and sought to impose Islamic law.
Although the ICU was ousted earlier this year, its remnants and allied tribes have since waged a guerrilla war targeting government officials, Ethiopian troops and African Union peacekeepers.