How to reset my iPhone 4 password?

My sister changed her password on her iPhone 4 and she can't remember her password. The phone has the latest update. I tried to connect it to iTunes and restoring it but it does not reset. It keeps saying it can't get restore because the phone has a passcode. I also tried the trick of holding the home button and the lock button until the screen goes black and restoring it. That has not worked either. Does anyone have another thing that I could try to get my sister back into her phone? Please and Thank you.

Call 1-800-MY-APPLE.