The computer boots up and ask for PASSWORD, which we do not have. Is there a way to recover a system back to factory state?Purchase restore disk from manufacturer or OS disk.

Any computer tech can remove the old password for you, but you do need to prove that you are the legal owner of the PC and not someone who stole it.

A good FRIEND of mine, just got a laptop PC from his son-in-law, that was password protected.  Of course, my friend did not have the password but I knew he was the now legal owner of the PC, so.....
I pulled out my boot CD with the password remover program on it and in less than five minutes I was into the PC.

A password is like a $.95 PADLOCK....only meant to keep the honest person honest.  They can be easily removed.

Good Luck and Happy Holidays!
 Many manufacturers (Samsung, LENOVO, Sony, etc, etc.) now commonly include a separate recovery partition on the primary hard drive, which can be used to factory reset.  If you post make and model of computer, you will receive more specific advice.  Often all you need to do is hit a specific key when booting up (e.g. F4) and then follow a WIZARD.